Ahead of the United Nations Climate Change Conference (COP28) in Dubai, UAE, The Rockefeller Foundation made a significant announcement. The foundation is targeting net zero greenhouse gas (GHG) emissions for its $6 billion endowment by 2050. This move positions it as the largest private U.S. foundation to pursue such a target.

Following other US institutions like Harvard University, which committed in 2020 to reaching net zero emissions for its >$50 billion endowment by the same deadline, Rockefeller’s next step involves driving more significant decarbonization efforts. 

The Rockefeller Foundation’s Net Zero Influence

President Rajiv Shah highlighted The Rockefeller Foundation‘s commitment to divesting from fossil fuels 3 years ago. They have pledged $1.5 million to a global initiative that will support developing countries’ transition towards clean energy. 

Image from The Rockefeller Foundation

Today, they are focusing on pushing for greater decarbonization through both direct investments and influence. 

According to the foundation’s Chief Investment Officer, Chin Lai, the move is more than their endowment. Lai commented noted: 

“Because net zero is a collective goal… we will encourage our fund managers to engage with companies on emissions reduction plans, invest in climate solutions, and use our convening power to advance net zero adoption among investors.”

Lai outlined three strategies for Rockefeller to extend its net zero influence. 

First, working with money managers who can have a more significant impact on decarbonization efforts. 
Second, directly investing in companies offering climate change solutions (pledging $1B to climate solutions over the next 5 years). 
Third, establishing benchmarks to measure progress and sharing these with other investors, aiming to encourage wider participation in their efforts.

The 5 Core Guiding Principles

The new strategy centers around maintaining the endowment’s crucial role in providing sustainable funding for The Rockefeller Foundation’s global initiatives. It primarily focuses on engaging with asset managers and other stakeholders on data, disclosures, and decarbonization plans. 

RELATED: Net Zero Asset Managers Initiative Grows to 273 firms and +$60 trillion in AUM

Moreover, it emphasizes investments in climate solutions and other climate-focused strategies. The strategy aims to exert influence by organizing influential gatherings, advancing collaboration, setting standards, promoting best practices, and fostering shared learning.

The net zero strategy for the $6 billion endowment rests on five core principles:

Prioritize Real-World Change: Prioritizing scalable approaches today and technologies expected to scale in the next 15-20 years.
Be Pragmatic: Recognizing diverse roles in asset classes, investment managers, and vehicles .
Learn Continuously: Recognizing that there isn’t a single correct method for an investor, fund manager, or company to achieve net zero.
Maintain Accountability: Promoting transparency at both portfolio and manager levels and committing to regularly share progress to uphold accountability.
Lead by Example: Organizing crucial stakeholder gatherings and leveraging The Rockefeller Foundation’s influence and voice in the investment industry and philanthropic institutions.

Going Beyond Setting Net Zero Targets 

The Foundation’s philanthropic journey traces back to 1913 when it started with an initial endowment of $100 million from John D. Rockefeller, the founder of Standard Oil. It’s a company that once held control over more than 90% of petroleum production in the United States. 

Over the past 110 years, the Foundation has invested $26 billion in philanthropic capital. This recent policy continues the Foundation’s commitment, initiated in 2020, to divest its endowment from existing fossil fuel interests.

Additionally, it pledges to abstain from making any future investments in fossil fuels, building upon this ongoing dedication to environmentally responsible investing.

The Rockefeller Foundation’s new net zero endowment policy aligns its internal investment strategy with the commitment to spend over $1 billion to drive the global climate transition. This comprehensive climate strategy, unveiled in September, also involves efforts to achieve a net zero standard for its facilities.

The Foundation’s operational sites, spanning from its headquarters in New York City to locations in Washington, D.C.; Nairobi, Kenya; Bangkok, Thailand; Bellagio, Italy; and other operational areas worldwide, are included in this initiative. 

As part of this ongoing effort, The Rockefeller Foundation completed its assessment of the accounting of its carbon footprint for the baseline year of 2022. The evaluation revealed an estimated annual emission of 12,000 metric tons of greenhouse gasses across its operations.

The Foundation’s Roadmap to Net Zero is still in process and will be finalized in early 2024.

RELATED: IEA’s 2023 Net Zero Roadmap

With that, the Foundation’s goal extends beyond establishing targets and strategies for reducing carbon emissions across Scope 1, 2, and 3. It also aims to collaborate with and support others within its ecosystem by sharing the knowledge gained and the progress made during this journey toward decarbonization.

The Rockefeller Foundation’s 2050 net zero is a milestone in climate-focused philanthropy. Their dedication to transparency, innovation, and accountability is a significant step towards driving systemic change in the fight against climate change.

The post Rockefeller Foundation Aims 2050 Net Zero for $6B Endowment appeared first on Carbon Credits.

The Ministry of Ecology and Environment (MEE) in China released guidelines signalling the revival of the domestic voluntary carbon market (VCM), alongside revealing the rules for account registration, giving final touches on the market’s reboot.

China’s VCM, known as China Certified Emission Reduction (CCER), restarted after a six-year hiatus. The market had been paused since 2017 for new project registrations while the government sought to strengthen regulatory frameworks.

The Role of China’s Voluntary Carbon Market

China introduced its national compliance emissions trading system (ETS) in 2021, being one of the first Asian countries to do so. The world’s largest in terms of emissions covered, China’s ETS is estimated to account for >40% of its carbon emissions. This footprint is largely from its power sector. 

After the completion of the first compliance period for China’s ETS, the government has been preparing to relaunch its CCER.

READ MORE: China Ready to Reboot Carbon Scheme

The discontinuation of the CCER plan in 2017 was due to low trading volumes and inadequate carbon audit standards. With the establishment of China’s national ETS, the revival of the CCER system gained momentum, aiming to address previous shortcomings and bolster carbon reduction efforts.

Under CCER, carbon emitters compensate credit-holding entities, such as renewable energy producers, for their credits. These voluntary CCER credits allow companies within the compliance markets, ETS, to offset their emissions.

They can be used to cover shortfalls in China Emissions Allowances (CEAs) or as tradable credits within the national ETS. But their use for offsetting emissions is restricted to only 5% of emissions exceeding the national ETS targets. 

Earlier this year, the MEE introduced new legislation and approved 4 methodologies for CCER credit issuance, clearing the path for new projects and supplies to enter the market. The Beijing Green Exchange, to host the trading platform for CCER credits, also issued rules for CCER trading and settlement.

VCM Complementing the Compliance Market

China’s VCM reopening may increase supplies for compliance market companies, allowing them to use the credits to offset their emissions. 

Chart from S&P Global Commodity Insights

Since 2021, the compliance carbon price hit a record of $10.12/mtCO2e on August 18, surpassing the $10/mtCO2e mark for the first time. This ETS price traded 4x – 5x that of international voluntary carbon prices, partly due to the government tightening policy and resolving compliance problems.  

Moreover, the increasing awareness of climate issues among the public might lead to tangible policy changes and a gradual transition in the business approaches of state-owned enterprises towards decarbonization. These businesses have also begun to manage their carbon assets strategically like physical assets. 

However, some experts speculate that the availability of government-backed CCER registry credits may reduce voluntary carbon credit supplies from China in the international market. This shift could be due to more favor on government-backed credits, which could have higher prices compared to VCM credits. 

Go here for the most recent China ETS prices. 

Per S&P Global Commodity Insights, nearly 21% of VCM credits issued globally in Q1 of 2023 came from China. This figure emphasizes the nation’s major role in the international carbon credit market. 

New Rules for CCER Credits Trading 

With the new guidance from the MEE, a project would be qualified to generate CCER credits by meeting the following criteria:

Perform a comprehensive and accurate emission reductions accounting;
Estimations of emission reductions must be conservative;
Transparent disclosure of a project’s information; and
Not registered twice under other ETS.

The MEE-approved methodologies include forestation, mangrove cultivation, solar thermal power and grid-connected offshore wind power projects. But there are other projects that can also potentially participate in CCER credits trading, including:

Carbon capture, utilization, and storage (CCUS)
Transportation
Sustainable agriculture
Improved efficiency in power generation
Methane mitigation 
Waste treatment
Industrial production

In terms of registration, trading, and settlement of CCER credits, the new rules set no restrictions on who can participate. Businesses under the compliance carbon market, project developers, and other trading entities can trade CCER credits. 

According to the Beijing exchange, which will solely manage and publish all trading information, forms of trading include the following:

Listed transactions
Block trades
One-way bidding

For carbon credit price fluctuations, changes should not go beyond 10% above or below the base price for listed transactions. Base price refers to the weighted average price in the previous trading period. For block trades, price changes should be limited to 30% above or below the base price. 

However, there’s currently no clear indication on how a foreign investor can engage in China’s domestic carbon markets.

Ultimately, non-public trading is illegal and strictly not allowed to disclose such information for CCER credits trading. Similar measures were published by the host of the Chinese compliance carbon market to avoid leakage of information. 

Despite these measures, the official timeline for the CCER market’s restart has yet to be announced by the MEE. Yet, their introduction indicates the readiness of the CCER market for a prompt relaunch, aiding the biggest polluter to lower its towering carbon emissions.

READ MORE: China’s CO2 Emissions Up 4% in Q1 2023, Hit a Record High

The post New Rules to Jumpstart China’s Voluntary Carbon Credit Market appeared first on Carbon Credits.

The newly appointed President of the World Bank, Ajay Banga, unveiled plans to launch a mechanism for certifying forest carbon credits in the coming months. His mission is to revolutionize the bank’s operations while enhancing the credibility and transparency of voluntary carbon markets.

Banga emphasized the urgent need to redirect resources from affluent nations to less prosperous regions to address climate-related challenges. 

In his address to a substantial audience at the Singapore FinTech Festival, he stressed that achieving this goal cannot solely rely on taxation or calls for financial contributions from wealthier countries due to political barriers. Instead, Banga proposed that reinforcing the trustworthiness of voluntary carbon markets holds the key.

Revamping Forest Carbon Credits for Credibility

The World Bank’s imminent certification mechanism for the forestry sector aims to establish reliable carbon credits. It also seeks to ensure proper pricing and direct resources appropriately.

Banga highlighted the significance of incorporating safeguards against deforestation and misleading reforestation practices to enhance the credibility of these markets. 

During a conversation with Ravi Menon, the head of Singapore’s central bank, Banga emphasized that endorsing certified green credits could potentially streamline the carbon pricing process. 

This strategy is meant to facilitate the flow of funds from companies and investors in developed nations to developing countries. The latter often provide the forest carbon credits that rich nations are buying.

Carbon credits have been a mechanism for companies and governments to mitigate greenhouse gas emissions. However, recent incidents such as the case with South Pole, a major carbon offsets player, have tainted the industry’s reputation. 

Renat Heuberger’s exit as South Pole’s CEO followed accusations that the company exaggerated the climate impact of its products. Ajay Banga’s initiatives aim to address such credibility issues and instill trust in the carbon credit markets.

READ MORE: South Pole Cuts Ties with Zimbabwe Carbon Offset Project Kariba

It’s important to note that major companies are also trying to rebuild confidence in these markets. Large asset managers and investors such as Manulife and Stafford Capital have raised millions of dollars in closing their forest carbon credit funds. Also, the likes of Oak Hill Advisors are also spending billions to reduce logging and boost forest carbon deals.

Redefining World Bank’s Focus

Ajay Banga’s leadership at the World Bank has introduced innovative proposals. The major one is expanding the institution’s focus on poverty alleviation to address urgent global issues like climate change. 

During his address at the FinTech Festival, Banga advocated for the repurposing of subsidies that contribute to environmental harm. He highlighted the necessity to redirect subsidies, which presently support fossil fuels, towards initiatives that combat climate change. 

Emphasizing the significance of allocating resources more thoughtfully, he expressed the need to reconsider how public funds are utilized, saying that:

“Repurposing these subsidies can be enormously helpful in the fight on climate…We must find a better way to spread the peanut butter.” 

According to a World Bank report, the global expenditure on sectors like agriculture, fishing, and fossil fuels amounts to a staggering $1.25 trillion annually—equivalent to the size of a major economy such as Mexico. 

Banga also stressed the role of multilateral development banks (MDBs), including the World Bank, in mitigating risks associated with climate-related projects. He proposed the idea of absorbing initial losses from projects like wind and solar, making them more appealing to investors.

In 2022, about $61 billion of MDB climate finance was given to low-income and middle-income economies. 63% ($38 billion) of this total was for climate change mitigation finance and 37% ($22.7 billion) for adaptation finance. 

Source: 2022 Joint Report on Multilateral Development Banks’ Climate Finance

Mitigating Risks in Carbon Markets

However, Ravi Menon, Singapore’s central bank chief, cautioned that using public capital to reduce project risks has practical challenges and lacks universal acceptance. Concerns about political and foreign exchange risks could deter Western funds from investing in emerging market climate projects.

But Banga countered by underscoring the importance of MDBs in addressing regulatory risks. These financial institutions could offer risk guarantees and insurance to incentivize private investment. 

The World Bank’s insurance arm protects investments from non-commercial risks, enhancing access to funding with better financial terms. The new president believes that the bank’s expertise is crucial in this space. Their backing will bolster private sector investments.

Recently, companies like Kita Earth are also introducing insurance products to protect carbon credit purchases. This safeguard has never been more crucial in building trust to scale this essential market that helps combat climate change.

READ MORE: Carbon Credit Purchases in Canada Are Now Protected With Kita

Backing carbon markets underscores a strategic shift in the World Bank’s role. It positions the institution as a key player in steering financial resources towards sustainable and climate-resilient initiatives while navigating the challenges associated with global investment in climate-related projects.

The post World Bank’s Push for Forest Carbon Credit and Climate Finance appeared first on Carbon Credits.

The Supervisory Body overseeing Article 6.4 of the Paris Agreement has recently released a preliminary draft document outlining proposed methodologies for carbon reduction projects. This is important as the most anticipated climate conference, COP28, will take place starting this November 30 in Dubai.

The methodologies are integral for projects aiming to claim Article 6.4 emission reduction credits, also called 6.4 ERs. The focus of the draft recommendation centers on the requirements set for projects aimed at curbing greenhouse gas (GHG) emissions.

Supervising “The Mechanism” 

The Conference of the Parties (COP), serving as the meeting of the Parties to the Paris Agreement (CMA), during its 3rd session held in Glasgow, made a significant decision by adopting Decision 3/CMA.3. The COP timeline is shown below, alongside the rising global carbon emissions.

The decision captures the rules, procedures, and operational framework for the mechanism established by Article 6, paragraph 4, of the Paris Agreement, commonly referred to as “the mechanism.”

In line with this decision, the CMA has appointed a Supervisory Body responsible for overseeing and administering the mechanism. It operates under the authority and guidance of the CMA. 

The Supervisory Body also works with full accountability to the COP. 

Comprising 12 members from Parties to the Paris Agreement, the Supervisory Body ensures a wide and fair geographical representation. Its members aim for a balanced representation, with this composition: 2 members from each of the 5 United Nations regional groups, 1 member representing the least developed countries, and 1 member representing small island developing States.

The term of service for the newly appointed members begins from the first meeting of the Supervisory Body this year.

Key Principles for Emissions Reductions & Accountability

Central to the Body’s proposed methodologies are several key principles and features of carbon projects. 

For instance, the methodologies advocate for a cautious approach in estimating a project’s emission reductions or removals. This is to ensure the credibility of the credits and to promote greater ambition in emissions reduction efforts. 

RELATED: ICVCM’s New Framework: Raising the Bar for Carbon Credits

It involves establishing emission baselines below the scenario of business-as-usual GHG emissions that would have occurred without the carbon project. 

Moreover, to uphold increasing environmental ambition, the draft suggests that the baseline should “evolve or lead to a downward adjustment of creditable emission reductions over time”. 

Additionally, stakeholder involvement throughout the methodology development process and accounting for potential uncertainties associated with the underlying data are crucial aspects emphasized in the draft.

Demonstrating a project’s additionality is another pivotal requirement within each methodology. It requires an assessment showing that the project activity would not have taken place without the incentives from the mechanism. But this should consider all relevant national policies, including legislation.

Mechanism methodologies will also need to address project leakage. This refers to a change in GHG emissions outside the project boundary linked with the project’s activities. 

Finally, the document touches upon non-performance and reversal aspects. These pertain to the potential reversal of emission removals or the risk that the carbon avoided or removed might not remain so for the duration of the project. An example would be a wildfire, which has been reversing the carbon removals of the trees under a carbon project. 

The draft mentions the ongoing need for the supervisory body to further develop guidance in these areas.

What Comes Next?

Some market players have commented on the draft prior to its release. An accredited observer organization highlighted the need to come up with an agreed definition of “removals”. They refer to clearly identifying exact removal of greenhouse gasses (GHG) versus carbon dioxide (CO2).

The Supervisory Body responded accordingly, adopting this final definition on its recently published draft:

“Removals are the outcomes of processes to remove greenhouse gasses from the atmosphere through anthropogenic activities and durably store them…”

Others also noted that until the credits are issued under the Article 6.4 mechanism, the voluntary carbon market (VCM) remains the primary avenue for private capital investment in activities aimed at GHG mitigation or removal.

Given the timelines associated with investments in project activities and the preparatory period for project implementation, the VCM is expected to remain the predominant platform for investment. This is likely to persist until 2025, if not longer, as frameworks and methodologies for the mechanism are established.

Therefore, the VCM will continue to attract investments until the Art 6.4 mechanism drafted becomes fully operational. 

RELATED: Voluntary Carbon Credits Market Can Be Worth $1 Trillion in 2037

Nonetheless, the Supervisory Body’s focus on key principles such as cautious estimation of emission reductions, stakeholder involvement, and addressing uncertainties reflects a commitment to credibility and accountability. The preliminary draft outlining methodologies for carbon reduction projects signifies a pivotal step in establishing frameworks for emission reduction credits.

The post Proposed Methodologies for Carbon Projects Under Paris Agreement’s Article 6.4 appeared first on Carbon Credits.