Virtus: The UN's Position on Carbon Credits & Offsets - Impact on Climate Finance
Gordian Knot Strategies
We are Igniting Climate Solutions: Mobilizing $1 Billion Per Year in Impact Investment by 2030!
Welcome to the July edition of Virtus.?
With a scorching summer already upon us, we're exploring ways to keep both ourselves and the planet cool. This month, we highlight our efforts at Gordian Knot Strategies to contribute to environmental protection and facilitate capital movement.
In response to a recent UN draft document on carbon credits and offsets, this month’s “Our Take” investigates the UN’s involvement in carbon markets, its current stance on carbon credits, the mixed signals it is sending to market participants, and the potential impacts on climate finance.
Our July guest for the podcast “Untangling Climate Finance” is our CEO, Sean Penrith, making his second appearance. In their conversation, Jay and Sean discuss climate finance, carbon markets, impact investing, and biodiversity credits.
We also feature notable podcasts and reports this month, covering topics such as Vice President Kamala Harris’ new presidential run, the impact of AI on power usage, REDD+, and science-based targets for emissions reductions.
As always, we highlight key climate finance deals and discussions from around the world.
Happy reading and listening!
We are Igniting Climate Solutions: Mobilizing $1 Billion Per Year in Impact Investment by 2030!
We are proud to announce that this month Gordian Knot Strategies compensated for our entire 2023 team carbon footprint using high-integrity carbon offsets.
Each of our team members calculated their individual carbon footprints for the year using the Footprint Calculator by the Global Footprint Network. To account for our impact, we purchased carbon credits from the “A Bearadise” project listed on Cool Effect.
The “A Bearadise” project, registered on Verra, focuses on preserving old-growth forests, which will reduce approximately 1.5 million tonnes of carbon over 30 years. This project aims to ensure the survival of these trees to provide habitat for wildlife and clean air for our planet. By sequestering carbon over a 30-year period, the project helps restore ecosystems home to grasses, blueberries, and mosses. It also protects diverse wildlife, including salmon, brown bears, otters, ermines, deer, goats, beavers, rabbits, and bald eagles. The project also creates local jobs for property supervision and monitoring which further benefit the community.
For 2024, we are committed to reducing our carbon footprint even further. We believe in walking the walk, not just talking the talk, and have set ambitious goals to continue our journey towards sustainability.
Last week, a draft United Nations (UN) document, surfaced by the Financial Times, expressed opposition to companies using credits to neutralize their carbon dioxide footprint. The UN document, prepared by a task force convened by UN Secretary-General António Guterres, advocates that companies should refrain from using carbon credits to offset emissions outside state-regulated schemes. Instead, the UN believes companies should invest in reducing their emissions rather than relying on the voluntary carbon market (VCM).
Although the UN opinion aligns with recent scrutiny of carbon market malpractices, it voices a very conflicting message, as the UN led the development of the Clean Development Mechanism and is currently working on developing a new Paris Agreement Article 6 carbon market.
The statement from the recent UN draft document prompts a look under the hood of the UN’s involvement in carbon markets, its current stance on carbon credits, and the mixed signals it is sending market participants.
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Client Served in the United States
We were engaged by a national body that oversaw a successful farmer-to-farmer network that offered a range of services and products to support farmers in making data-driven decisions. Our charge was to develop strategic options for the scaling of a fund to advance regenerative agriculture amongst its members. Leveraging our Climate Solutions Strategy development services, we worked to reveal the critical value proposition and pathway to effectively leverage the impact investment market and build on the organization's mission to create a future of farming that puts farmers first by democratizing information, providing unbiased analytics and creating competition for farmers’ business.
“GKS is thorough and exacting in their thinking and work. They make sure they understand our needs and goals, touch base while they are doing the work, and provide ample opportunity for feedback and course correction.”
Peter Stangel — Senior Vice President, US Endowment for Forestry and Communities
??? In our July episode of Untangling Climate Finance, we welcome back Sean Penrith (CEO, Gordian Knot Strategies) nearly a year after his first appearance, to discuss some GKS’s key focus areas - climate finance, carbon markets, and impact investing.
Jay and Sean explore the current state of climate finance for mitigation and adaptation, the challenges and progress in carbon markets, and the role and growth of impact investing, along with insights into biodiversity credits.
Stream the episode on any of the following platforms:
领英推荐
??? The team at Outrage + Optimism discuss President Biden’s announcement that he will not seek re-election and his endorsement of Vice President Kamala Harris as the Democratic Presidential Nominee in a new episode titled, “US Election Special: Is a Win for Harris a Win for Climate?” They explore Harris’s strong record on climate action, reflect on Biden’s climate legacy, and speculate on the potential outcomes and implications of Harris's historic candidacy, including her chances against Trump and the prospects for future climate policies.
?? In a comprehensive report from the Rhodium Group - Taking Stock 2024: US Energy and Emissions Outlook - show that as of 2023, US GHG emissions were 18% lower than in 2005, and new federal and state policies, including the Inflation Reduction Act and Infrastructure Investment and Jobs Act, are expected to accelerate reductions, potentially achieving a 38-56% decrease by 2035. However, despite these advancements, the US is still not on track to meet its Paris Agreement commitment of a 50-52% reduction by 2030.
??? In “AI’s Insatiable Needs Wreak Havoc on Power Systems” from the Big Take, the host David Gura and Bloomberg reporter Josh Saul discuss how AI data centers are rapidly increasing energy consumption, with projections showing significant rises in power demand in Sweden, the UK, and the US by 2030. The two explore the impact of these energy needs on local communities, energy prices, and renewable energy efforts.
?? A new report - Modest Forest and Welfare Gains From Initiatives for Reduced Emissions from Deforestation and Forest Degradation (REDD+) - indicates that REDD+ projects offer cost-effective climate change mitigation but show mixed results. A machine-learning review of 32 studies from the authors found moderate and temporary environmental benefits and welfare-neutral to slightly positive socioeconomic impacts, hindered by poor spatial targeting and funding issues. This highlights crucial lessons for improving future initiatives and keeps the conservation about REDD+ projects going.?
?? Another recent report - Science-Based Targets Miss the Mark - argues that science-based targets for emissions reductions are often misleading and insufficiently ambitious, especially for well-resourced countries and companies. It highlights three key issues: misrepresentation of global emission reduction needs, arbitrary benchmarks, and unequal effort-sharing. To improve the effectiveness of these targets, the authors suggest incorporating social sciences and humanities which could allow for more nuanced and equitable approaches that maximize each actor's contribution to global mitigation efforts.
Below is a summary of some of the major climate finance deals in July. Click the title for the full article.
Although this is not a closed deal, it is still significant that U.S. Treasury Secretary Janet Yellen emphasized the need for $3 trillion annually to combat climate change, calling the transition to a low-carbon economy the "single greatest opportunity of the 21st century." Speaking in Brazil, Yellen highlighted the importance of strong climate finance policies through 2050 to address the existential threats posed by climate change. She also announced the Amazon Region Initiative Against Illicit Finance to combat illegal activities harming biodiversity and reaffirmed the U.S. commitment to sustainable development in the Amazon region.
Azerbaijan, the host of the U.N. COP29 climate summit, announced the launch of a $1 billion climate fund to support developing countries' climate targets. The fund, based in Baku and overseen by a multi-national board, will receive contributions from fossil-fuel producing countries and companies, aiming to enhance ambition and enable action against climate change.
The U.S. Environmental Protection Agency announced over $4.3 billion in Climate Pollution Reduction Grants to support community-driven climate solutions across 30 states and one Tribe. The grants, funded by President Biden’s Inflation Reduction Act, will target six sectors, including transportation, electric power, and agriculture, to reduce greenhouse gas emissions and advance environmental justice. The selected projects are expected to significantly cut greenhouse gases by 2050, create economic and workforce development opportunities, and improve public health, particularly in disadvantaged communities.
Unfortunately, not all deals are good and honest. At COP28, the UAE announced a $30 billion climate fund, ALTéRRA, to support energy transition, yet shortly after, ALTéRRA-backed funds invested $300 million in a fossil gas pipeline. This contradiction, uncovered by Climate Home News, undermines the fund's stated goal of advancing climate solutions, exposing it as a potential greenwashing effort rather than a genuine move toward reducing fossil fuel dependency.
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