Zero carbon and cash at a thousand | Voluntary and jurisdictional carbon credit markets tend to grow exponentially.
(STG News – 26 August 2021)
On the global sustainability agenda, one of the topics that is certainly in vogue is the neutralisation of greenhouse gas (GHG) emissions. It’s on the agenda because it’s extremely important, not because it’s a fad. We live in times of undeniable climate challenge and there is constant news about the setting of audacious targets, which have arisen from commitments between countries and also between companies from the most diverse production chains in the world.
There are three different types of emissions market: regulated, voluntary and jurisdictional. The regulated market was born out of international agreements, such as the Kyoto Protocol (1997) and the Paris Agreement (2015). The first of these created a system of mere compensation, which failed to involve everyone in limiting their emissions.
At the beginning of the century, the Kyoto Protocol’s Clean Development Mechanism began to promote specific projects in countries that did not have mandatory emission reduction targets, with the aim of selling carbon credits to companies and industrialised countries that had mandatory limits.
The Paris Agreement of 2015, unlike the Kyoto Protocol, called on all signatory countries to take responsibility for controlling their own emissions. Once the mechanisms for reducing climate impacts proposed by the Agreement have been regulated, each country will have voluntary emission targets and will have to account for GHGs.
There is the jurisdictional market, which obeys the rules, limits and requirements imposed on certain regions. China, France, California and other countries have this type of market internally and the trend is for them to expand their “jurisdictions” of emission rules as much as possible.
The voluntary market, despite being subject to certain regulations and standards, embraces the essence of the private sector’s freedom to contract. It is not necessarily necessary for a project to be certified in order for the credits to be marketed to another private individual. Certifications are often absurdly expensive and would make commercialisation unfeasible if they were a requirement.
It should be pointed out that many voluntary emissions market projects lack accuracy in counting credits and do not always indicate transparency in achieving targets. Special attention should be paid to the correct measurement of the reduction in emissions by private individuals: sustainability accountability.
In any case, despite the slow pace of regulation of the mechanisms of the Paris Agreement itself, voluntary and jurisdictional markets tend to grow exponentially, raising awareness of the importance of sustainable practices.
The Centre-West already has regenerative agriculture projects in its territory that are excellent sources of carbon credits. These projects have existed in Brazil for more than a century and tend to fit into the voluntary emissions markets as well as the jurisdictional markets, because they already follow certain standards of sustainability in production, to the point of guaranteeing a balance in carbon emissions
