Task Force to Scale the Voluntary Carbon Market Report

The key now is to scale voluntary carbon offsetting in the right way, not just to increase the market for its own sake.
It is worth restating core principles of carbon markets. Carbon finance is meant to be catalytic—to enable that which would not otherwise be possible with traditional finance. It’s fit-for-purpose for some types of activities, not all climate action. Carbon finance was also originally conceived as a mechanism to deliver development outcomes, not just climate mitigation.

Gold Standard was founded to ensure that carbon markets reflect the highest level of environmental integrity and contribute to sustainable development, and we have brought our nearly 20 years of experience to the work of the Task Force to ensure that these principles remain in place as the voluntary market scales. There are places where we see this reflected in the published report, but others where detail is lacking.

We share here the main points where Gold Standard either disagrees with elements of the report or sees as most critical to resolve in the next phase of the Task Force work if the market is to have the integrity needed for impactful climate action.

1. Standardized contracts must provide sufficient clarity to incentivise high impact projects. While the Task Force highlights the importance of safeguards, stakeholder inclusivity, and SDG benefits, we don’t yet know how these will be operationalised. The Task Force report summary relegates SDG benefits to “additional attributes” and suggests that they can just be traded via over-the-counter transactions. This risks crowding out vulnerable community-based projects, particularly those in Least Developed Countries where impact is often highest. Thus, the work of the Core Carbon Principles working group in phase 2 is critical to make best use of carbon finance.
2. Project-based REDD+ credits have no place in the voluntary carbon market. Avoiding deforestation and degradation is critical to reach climate targets and the broader sustainable development agenda, and Gold Standard recognises the need for an urgent increase in finance to tackle this. However, challenges related to environmental integrity make them unsuitable for carbon credit issuance. These concerns were raised by many stakeholders during the consultation process but were not taken on board by the Task Force. This is therefore an opportunity for a high ambition coalition to work to catalyse climate and development finance for REDD+ efforts as more appropriate and effective means to conserve standing forests.
3. We need a thoughtful transition to corresponding adjustments (CAs) where they are needed. Let’s be clear about what offsetting is: it is a promise to your stakeholders that you have compensated for your emissions so the net effect on the atmosphere is neutralised. Civil society and academics have clearly demonstrated that avoiding double claiming is required for credible offset or compensation claims. Some voluntary standards and market proponents now argue that double claiming doesn’t matter, even those that have had requirements in place for years to avoid double claiming in markets like Australia, which they now claim never made sense and will cancel. This will no doubt make them more popular in the industry in the short term. However, this abdication of responsibility undermines credibility and trust, which could lead to another market collapse. Gold Standard’s position is to recognise, as the Paris Agreement does, countries’ “respective capabilities” by implementing corresponding adjustments first in the developed world, where capacity exists to operationalise the process.

A high-integrity voluntary carbon market that delivers climate and development outcomes is a powerful tool. But without integrity, voluntary offsetting is not just less effective; it has the potential to be actively harmful. Gold Standard will continue to engage in the next phase of the Task Force’s work, advocating for integrity to be held in as high a regard as scale as its work progresses. But as the Task Force has left vital questions on integrity unanswered, it’s now time for civil society to provide clear definition on how to best direct finance for maximum impact toward climate security and sustainable development.