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What new climate finance agreements at COP29 mean for carbon offsetting with Dr. Injy Johnstone
84 Plays3 months ago
Dr. Injy Johnstone, a Research Fellow in Net-Zero Aligned Offsetting at the University of Oxford, joins Mike, Alina, and Anthony to discuss the recent 29th Conference of Parties in Baku. They tackle the historical challenges with carbon offsetting, the nature of the long-awaited Article 6 of the Paris Accords, and what the outcomes from Baku mean for carbon offsetting going forward.
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Transcript
COP29 Overview: Funding and Carbon Financing
00:00:10
Speaker
All right, everyone welcome to the innovation matters podcast ah we have recently seen the conclusion of COP29 in and Baku, Azerbaijan. And there was ah a lot of news coming out of that, of course, a lot of you know coverage about the the funding mechanisms and the the the carbon financing deals that were attempted to be made there. um Drove, I think, a lot of the car the discussion around that. But there was also some really important developments
00:00:42
Speaker
I think in the carbon markets the under the Article 6 of the agreement, some some really important agreements and advancements there. So I thought it'd be really valuable to have somebody on. ah on innovation matters here to talk about this. And we're very lucky to have a great expert here. Dr.
Expert Insight: Dr. Inji Johnstone on UN Projects
00:01:00
Speaker
Inji Johnstone is a research fellow and net zero aligned offsetting at the University of Oxford, associate member of St. Anthony's College. um So she's done a lot of research in this area. She's been um involved in in various UN n projects. She's a technical review editor for the UNEP Global Environmental Outlook. and
00:01:24
Speaker
sits on the expert roster for ah for article 6.4 and is just generally very knowledgeable and involved in this area. So really fortunate to have her on. Angie, welcome to Innovation Matters. Yeah, great. Thank you so much for having me.
00:01:40
Speaker
I thought to me, first of all, we could just get ah a little bit about your background. ah So ah you're in in the net zero aligned offsetting program at Oxford. So what what is that program and then and how did you kind of personally end up getting involved in it?
00:01:54
Speaker
Absolutely. So the NetZera aligned offsetting program really speaks to the fact that ah we've no offsetting practices in general have been quite flawed and problematic and that we saw this huge need and opportunity ah in the wake of NetZera commitments to bring about that course correction through focusing on what end state are we trying to reach and then working backwards from that. One of the flagship outcomes from that is the release of these Oxford offsetting principles.
00:02:22
Speaker
So they they propose four principles um to assist organisations to develop their own net zero line offsetting strategies. But key to actually implementing a net zero line offsetting strategy is making sure that there's enough project supply and good quality project supply to actually utilise as part of that.
Article 6: Mechanisms and Market Impact
00:02:40
Speaker
And so that takes us to discussion not only on the voluntary carbon market, but right through to more compliance regimes and also to international systems such as that ah that is emerging under Article 6 of the Paris Agreement.
00:02:52
Speaker
And this is a space that I've been researching for several years. So I got into it through my PhD, which researched the environmental integrity of carbon markets and involved ah being in the negotiation rooms, kind of really tracing through how environmental integrity ah was being shaped and discussed in and the article six room and ultimately where that's um ended ah up and in terms of the rule book that we have now finalized in Baku.
00:03:21
Speaker
Yeah, and maybe you could also help lay out a little bit for the for the audience sort of what Article 6 of the Paris Agreement in in general is all about, because there's a couple of, yeah there's of some voluntary approaches, there's a centralized mechanism. but you know What is, ah with the approval of these rules, what is what is the role that the UN is going to play in these sort of global carbon markets?
00:03:46
Speaker
Absolutely.
Historical Context of International Carbon Markets
00:03:47
Speaker
so so Article 6 really establishes a voluntary mechanism where countries can partner and ultimately trade what's called mitigation outcomes, but that can often be thought of as the form of carbon credits we're familiar with ah on the voluntary carbon market at large. and This is seen as important in order to access mitigation that can be cheaper to fund overseas than can be done at home. um and Critically, Article 6 is designed to utilize those levers to enhance ambition. So it's not just seeking to displace the obligation of who needs to do these mitigation outcomes and kind of, you know, offshoring those, but it's really intended to provide a lever to maximize ambition through utilizing much more efficient kind of market mechanisms. But yeah, as I said, it's entirely voluntary.
00:04:33
Speaker
um Yet we're seeing really strong interest in countries, whether there's that's interest in hosting projects or in purchasing the results of those projects, so much so that over four-fifths of countries are relying in some way on Article VI to meet their nationally determined contribution under the Paris Agreement.
00:04:51
Speaker
um But really it's important to say that while this will be the largest form of carbon market the world has seen to date, it's not the first international one. We did have a system of carbon market mechanisms under the Kyoto Protocol, ah including the Clean Development Mechanism. So we've been able to you know have some insights into how such a market mechanism may be implemented and what kind of lessons have been learned from the Kyoto Protocol days and perhaps where there's there's still some areas that um we may have to see more improvement in the future to ensure that the Paris outcomes are supported by market mechanisms and not undermined by them.
Challenges and Quality in Carbon Credit Trading
00:05:28
Speaker
Yeah, I mean, and there historically, there's been some example like ah the ah the Montreal Treaty for um dealing with ozone depleting chemicals, right? There was also some market-based emissions trading, essentially mechanisms within that. There are other examples of this being being effective.
00:05:46
Speaker
ah as far as I understand it. Absolutely. And I think what's quite interesting um so from the history of market mechanisms, we've gone from quite prescriptive systems such as under the Montreal Protocol, but also under the Clean Development Mechanism and such. um And Article 6 creates quite a broad framework for cooperation, which in some ways can um mean it could dev develop more partnerships and otherwise could have existed under market mechanisms.
00:06:09
Speaker
But it also means that we have to pay more attention to the quality of those projects and and how those projects again are utilized against national goals such as these kind of nationally determined contributions. Right. Yeah. So I mean, the basic idea right is if, um you know, a country, say,
00:06:28
Speaker
um the Azerbaijan, for instance, that decides they're they're not going to meet their nationally defined contributions, then they can go and strike a deal with you know Liberia to do some reforestation or or avoid some deforestation. and count the carbon benefits of that that forest staying in place um against the the emissions reduction targets that they they would not otherwise meet is the basic idea, right? Yeah, absolutely. And as part of that, it becomes really clear that we have to ensure that there's incentives in Azerbaijan's case to to make sure they're still doing as much domestic emission reduction as possible, because we know that that is needed across the board, but also in terms of Liberia, ensuring that
00:07:12
Speaker
ah that project wasn't already going to have occurred otherwise, um and also ensuring that they don't get the signal to to not be ambitious in their commitments because you can kind of sell the rest of of the things that aren't in your nationally determined contribution. um And so that's quite interesting. um As a result of of Paris and Paris's Article 6 being so broad, we have to think ah really carefully about what kind of systemic incentives it puts in place um for countries, but also corporates who may be relying on some of these outcomes as well.
Consumer Perception and Carbon Credit Integrity
00:07:42
Speaker
Yeah, that's the the sort of thing I'd see. like you know As a consumer, ah as an individual, right you see this and sort of I buy a plane ticket and there's like a box that I can check that says like you know like pay $2 more or to to offset the carbon from this flight. or or whatever. And and I think there's there's a bit of a tendency, at least for me, maybe I'm too cynical, but I tend to think like, oh, that' this is probably kind of BS, but I'll, you know, well, whatever, I'll do it. I'll do it anyway. Maybe it'll help a little bit, um especially because it's usually barely any money. um But there is the, so is that something that you see or kind of run into as ah as a perception, as a concern? Like, oh, like this
00:08:25
Speaker
this carbon market stuff is just kind of all, all it's all greenwashing or it's ah you know not really a legitimate way of reducing emissions or addressing climate challenges. Yeah, absolutely. That's definitely the perception. And I think what's quite interesting is there's there's a bit to unpack here because when you do speak to the person on the street about ah offsetting, it is that example of of planes that we think about. And oftentimes people assume that a tree is being planted on the other side, right? Whereas we know, and you hinted at that from the avoided deforestation example, that the vast majority of carbon
00:08:59
Speaker
credits are generated you know not from activities like planting trees or kind of carbon removal. They're generated by emissions avoidance and and kind of other emission reduction activities such as renewable energy, which in some jurisdictions is already cost competitive. I think that hunch that people get when seeing particularly those those very cheap you know options to offset, questioning the integrity of those is right.
00:09:23
Speaker
um And we have ah had a study just released a few weeks ago in Nature that ah said that less than 16% of those forms of carbon credits actually represented any kind of real reduction. um So that's that's kind of one half the story, but the other half is that you know we need to have more nuance in terms terms of what projects are being funded within this because it is possible and some ah actors and organizations are investing in the higher quality projects.
00:09:50
Speaker
um including some novel forms of durable carbon removal, you know which do have much higher price points and that those reflect the need for those investments to actually pull that carbon out of the air um and that you can have much more confidence that that is actually doing what it says on the tin um in terms of ah of what it's claiming to.
00:10:10
Speaker
oh I mean, you mentioned earlier that you've had this opportunity or there's been this opportunity to see what works and what doesn't. And you've highlighted some of the issues of these avoided emissions reductions ah projects, which are still really common. And I guess what specific actions do you see the groups taking to try and make these changes? You know, what lessons have been learned and and what improvements have been made to these to these markets going forward?
Verification and Pricing in Carbon Markets
00:10:35
Speaker
Yeah, so it's super interesting. So so for example, under Article 6.4, there's a stated need that the credits have to be real and verified um to be able to be counted. But what's quite interesting is when you dive into some of the nuance on on what that kind of looks like and means and whether that's actually going to come about in practice.
00:10:56
Speaker
it becomes more complex because, as I said, the first um you know market mechanism we had to experiment with it with ah with this kind of framework was the clean development mechanism. There was a lot of integrity issues, um accusations of kind of trading hot air under that system. And a large tranche of those credits were actually will be transferred from that system into the new Article 6.4 system, about $700 million emission reduction based credits.
00:11:25
Speaker
And in Baku, there was a question in the room kind of saying, hey, shall we make sure and like question the additionality of these projects? Because again, some of the categories that we've seen coming through in there are those ones that we know in general have a lot of integrity issues, and whether it's that they would otherwise have occurred in a respective of the carbon credit financing,
00:11:46
Speaker
Sometimes these installations are already built, right? And then people say, oh yeah, I can claim some common credit revenue ah back for them. So you know in in essence, there's ah there's an issue with the large scale amount of poor quality credits. And then and in tandem with that, that creates the conditions or makes it very hard for good quality projects.
00:12:08
Speaker
to actually attract funding because you know they're at higher price points, um they actually require investment to be able to be developed um and so it can yeah create a bit of a disparate landscape and so I think that's definitely one of the areas that we'll need to see more room for improvement in future is really letting Article 6 distinguish between the role of reductions in removals um and different forms particularly of removals because planting a tree is very different to sucking carbon out through a direct air capture machine.
00:12:41
Speaker
Yeah. And just for our listeners, I think you know when we talk about these additionality challenges, it's basically just... And also, so I make sure I know it like i get it right. The idea is basically, like if you were going to do something anyway, you can't get a carbon credit for that. right And one of the big challenges with a lot of these clean energy projects is like, hey, you guys were going to build these anyway. Hey, this was already in your plan.
00:13:02
Speaker
You're not doing something additional. You're not expanding the capacity or offsetting other energy. And the flip side of that, and this is often where it comes up with the issue of deforestation, is you can sell credits for not chopping down trees, right?
00:13:18
Speaker
But it's quite difficult to prove in a very concrete way if you were really going to chop those trees down or not. i mean In some cases, it's a bit maybe a bit clearer if you're a logging business, but especially in developing countries, there's a lot of ah challenge there. Now, this is before you get into the issue of like what physically happened on the ground. right Did the trees actually get chopped down or not?
00:13:43
Speaker
but you know so those are the kinds
Indigenous Rights and Economic Impacts in Carbon Credits
00:13:46
Speaker
of challenges that something like like you mentioned direct air capture or um you know maybe CO2 to concrete, they don't have those types of challenges. You can look at the amount of carbon captured, or you can look at the amount of concrete produced and know with a lot of confidence how much CO2 is removed from the atmosphere. But the price the price differential is really huge. I mean, I think DAC is $500 to $700 a ton. And some of these nature-based solutions are $10, $25 a ton or or less, right? Just so I have that. That's all right. I guess so I have that right.
00:14:19
Speaker
Yeah, absolutely. and And so it's super interesting because, um yeah, in some cases in the avoided deforestation projects, ah by way of showing that that forest is under threat actually causes more deforestation around the project boundary. um And so, yeah, it's led to a lot of, a lot of super interesting um case studies of how it can be easy to game the system. But that's also given us important lessons in terms of what rules could be necessary and are necessary to ensure better integrity in that system.
00:14:48
Speaker
Article 6 still creates quite a wide framework and you know in doing so, it really leaves some of those integrity choices up to the implementing countries as well as the buyers and who are doing those kind of due diligence exercises in terms of what they're purchasing through a mechanism like that.
00:15:05
Speaker
Yes, and like you said, the narrative is that this mechanism would ah contribute to protecting the rainforest, protecting our our trees, but we've seen even with the ah predecessors of ah There's like thinking about the debt for nature swap. oh We've seen countries like Costa Rica building this national parks to um basically to offset some of their debt, right, um for the two to Netherlands. But what actually happened in reality was that the indigenous communities in those countries were removed
00:15:46
Speaker
from the areas and the the country's economy was more and more tied to this type of economy. So I'm wondering um I mean, there is some some people are arguing that carbon trading could negatively impact economies in developing countries ah that issue carbon credits because thiscon these economies will become more and more dependent on offsetting emissions for polluting nations, ah whereas polluting nations economies would just go as as usual.
00:16:23
Speaker
so Yes, are there any um ways to protect these economies or protect the rights and livelihoods of communities living in those targeted areas? Absolutely, so you've hit on two really key aspects of you know what this means for real-world operationalization in the coming years. The first being that one of the major impacts of carbon crediting projects across the board, both whether they've been set up under
00:16:54
Speaker
you know international mechanisms like the clean development mechanism or in general under the voluntary carbon market has been cases of disposition of um of indigenous peoples from their lands and you know this is hugely problematic and and under the clean development mechanism there actually was no formal way to lodge or complain about a project um that was issuing credits for breaches of their human rights and for kind of other infringements like this.
00:17:21
Speaker
This has been an area that there has been lessons learned in terms of Article 6.4, so there is now a grievance mechanism that's been set up as well as a sustainable development tool that is designed to be used to assess the risks of certain projects um and and in terms of of what kind of impacts they could have on local communities.
00:17:39
Speaker
so So that's an area of progress. But what's super interesting in terms of that longer term question, and that comes back to some of that systemic and incentives that are at that government level about when you're deciding to what extent will we use Article 6? How will we you know develop our legislative framework to enable it?
00:17:57
Speaker
There has been um some risks of that kind of, you know, the example that you mentioned in terms of setting up a potential dependency on credit revenues for for these kinds of things that once that crediting revenue runs out, you know, again those forests stay under a threat but permanent emissions have been released by way of compensating.
00:18:17
Speaker
um for those emissions. But on the other hand, we've seen some really interesting developments in terms of some governments um in the global south issuing positive lists for projects, including some of the higher hanging fruit, ah for instance, biochar in India. And this could actually create a much um greater opportunity for economic revenue generation and to create a new kind of export industry because if you are a country and um and there's there was a new initiative launched called GZERO about the countries that are already carbon neutral, you could see a case um for them creating these new you know carbon removal export industries and really reaping those benefits domestically as well.
00:18:58
Speaker
um And so so, yeah, there's definitely ways to to utilize the system in a way that can um create much more sustainable revenue in the future. And there's definitely ways that, um you know, maybe some short-term decision making or other kinds of, um you know, risks could result in a framework that doesn't deliver um both for the climate, but also, much importantly, for the local communities um that live on on the land. That's great to hear. That's very hopeful.
00:19:29
Speaker
Yeah, so I think that kind of gives us a good sort of lay of the land, that the the the carbon markets and um some of the potential ah as well as some of the pit potential pitfalls of these.
Operationalizing Article 6: Transparency and Challenges
00:19:41
Speaker
ah So what happened in Baku? What was the kind of the key decisions that got made at this COP about these carbon markets?
00:19:50
Speaker
Yeah, great question. so So in effect, although the final pieces of the rules um that got agreed in Baku were seen by many as being the kind of pieces to finally operationalize Article 6. Article 6 had been in development for several years. We've got quite a strong pipeline of projects that are coming through in terms of we know the flavor of of kind of what's coming. But in Baku, a few key pieces of guidance was passed, as well as some direction setting on the kinds of reporting that is required, the kind of transparency levels. For instance, between country trades and and in general, what kind of the mechanics of the system um could look like, because there were still some some very big disagreements.
00:20:35
Speaker
um about some of that key those key pieces of infrastructure and in fact parties at COP28 walked away from the table with no outcome on either 62 or 64 because of that. So there was this fear that the same could happen in Baku and that we'd have potentially 10 years of negotiating this.
00:20:52
Speaker
um these market mechanisms under the Paris Agreement ah but there was an outcome reached and so we will see much more or much firmer steps now in terms of operationalization. um So it doesn't mean that kind of January 1st there'll be brand new credits issued but it does mean that by the end of next year we're likely to see um you know formal trades under both 6.2 and 6.4 And that will um start to kind of provide that indication of what role it will play in helping countries meet their nationally determined contributions and as well um to what extent it will bring like private capital to the table as well ah to help implement the Paris Agreement.
00:21:32
Speaker
it's also I think some discontent at least among NGOs and and other groups about about these outcomes, some sort of sense that the the the rules, the requirements for transparency, the rules for these carbon credits have ah that have come out of Baku or were maybe too lax. so What are sort of the concerns there and how how do you see that issue?
00:21:55
Speaker
Yeah, absolutely. So I agree, it was a very broad brush framework that was agreed. And I think we have to remember in the context of any kind of international negotiations, countries are always very keen to maintain as much national sovereignty as they can, right? So any kind of system where you're agreeing,
00:22:13
Speaker
multilateral rules ah under the UN, you know, causes quite a lot of discomfort among some countries who are used to, you know, really utilizing their full sovereign rights under international law. And so, you know, we saw that in the Article 6-2 room where there was some really strong pushback, you know, for instance, about making some elements of the reporting mandatory um and even very practically kind of having a standardized template that you can report against.
00:22:40
Speaker
um And these kinds of things can make a big difference because as we know from even reading nationally determined contributions, some are, you know, three pages long and others are 300. And so while you can have in theory the same information perhaps contained within them, the quality of it, the, you know, the breadth of like, ah you know, information, but as well the the kind of lessons and and things that you can actually take from it.
00:23:04
Speaker
differ vastly and so there's the real risk that we'll see similar smorgasbord of kind of reporting under 6.2 and critically also ah because the sequencing of kind of when parties might have to report certain aspects of their projects was also left up to them, we could also have a outcome where different agreements and and kind of transactions are actually known until much closer to the end of the nationally determined contribution period in 2030.
00:23:33
Speaker
So there is a risk that we won't maintain much oversight or try independent kind of transparency over the system, and that could um lead to integrity issues similar to what we saw on the voluntary carbon market, but at a much greater scale because we're talking about countries' inventories as opposed to corporate inventories.
Corporate Strategies for Net Zero and Carbon Credits
00:23:54
Speaker
Yeah, and I think this is one of the things that, um you know, the reason I'm interested in trying to to wrap my head around this is, of course, you know, we work at Lux with a lot of large companies and and a lot of them are in the audience for this this podcast, you know, we're thinking about how they're going to meet their ultimately net zero goals and in most cases and what role carbon ah markets can sort of play in that.
00:24:19
Speaker
you know And also, I think there' there's interesting, like how can we potentially find some some opportunities in generating some of these these carbon credits, whether it's through you know something very um you know very clear like direct air capture or something that's that's a little bit more nature-based or helping to change agricultural practices and soil carbon sequestration and things like that. There's a lot of these these potential routes, or blue carbon is another one we've been been talking about recently, enhancing carbon sequestration in the ocean.
00:24:47
Speaker
um So, and I think that's kind of the the frame that a lot of them see it through is like, this is greatly the affordable carbon credits. We can offset some of our emissions. It's it's going to be necessary for many industries to to reach at zero.
00:25:01
Speaker
and And there's, again, potentially some good opportunities and in generating these credits. But the sort of this risk that's hanging over it of, well, what if these credits don't turn out to be um to be as valuable as we thought they were or to be as impactful? you know we We might spend a lot of money on credits, and then we find out five years later that actually they didn't remove as much carbon as they were supposed to and now we're you know we're behind the eight ball on our on our goals and and maybe even vulnerable to ah you know some type of of of legal liability if we've we've made certain commitments or made certain statements or claims about our about our are
00:25:43
Speaker
about actually delivering on on net zero or on our our emissions reductions. So it's sort of like in the cost of the carbon credits, so you have that cost and how much is it going to take you to to buy a megaton worth of worth of carbon credits. And then also the risk of like, how confident can I be that these risks that these credits or offsets that I'm buying are really actually going to deliver on on on what they've said. and Is this UN n process really going to to help with that? Is it is it going to bring that that level of clarity and confidence?
00:26:17
Speaker
Yeah, that's a great question. I think ah many are looking for it to provide confidence in a kind of UN guarantee um in some ways, but it's really interesting because even the UN under 6.2 kind of said that despite them setting up a kind of registry function that countries can draw on if they don't want to set up their own national registries, um that they don't guarantee the environmental integrity of those outcomes.
00:26:42
Speaker
um And so I think that's quite significant that um there is this recognition that just because it's an Article 6 unit that it doesn't have necessarily, doesn't necessarily have environmental integrity. But under 6.4 there will be much more of a ah kind of um review of the methodologies that are at play.
00:27:00
Speaker
And so there can be a higher standard expected than you know perhaps you can access just in general on the voluntary carbon market for some project types, ah particularly the ones that tend to be more problematic. But in essence, some of the voluntary carbon market is already setting a much higher standard than what's likely to come out of Article 6.4. So I think corporate's thinking about engaging in the space.
00:27:21
Speaker
um shouldn't look to it for best practice, but they can see evidence of it as a form of practice and a form of practice that can be particularly crucial, say, if you're an airline and you're looking to to purchase credits for your COCEA obligations. you know In essence, you don't have a choice but to engage in Article 6 in some way, shape, or form because you need to be able to get a credit that can be internationally traded um in terms of being able to obtain a corresponding adjustment.
00:27:48
Speaker
And so so, yeah, it's super interesting because I think it still comes down to the fact that ah Article 6 sets a new standard, but what it doesn't do yet is distinguish properly, in my opinion, between the different types of projects and the very different you know risks and opportunities that each yield, particularly when we're talking about that net zero equation, which is both reducing your emissions and counterbalancing that with durable carbon removal.
00:28:15
Speaker
And I think it's precisely because of that. ah ah And because ah for consumers, um there is this belief that ah this mechanism is kind of a get out of jail free card for companies. So so I think because of that company should probably um make this part of a broader decarbonization strategy rather than just relying on carbon offsetting and carbon trading.
00:28:42
Speaker
Yeah, absolutely. And so, um you know, that's why we released the Oxford Principles for Net Zero, Carbon Aligned Offsetting because we really wanted to provide a very clear roadmap for organisations to start these journeys and really make it clear that ah as as much as it may seem difficult or complicated, it is really important that we put more pressure on all the companies that aren't doing anything at all rather than more pressure on the companies that are waiting into this game and do have that intention to make a positive contribution and in light of this.
00:29:11
Speaker
um And that right now is for the most part voluntary, but we are increasingly seeing this trend towards compliance pricing of of emissions. And so kind of dipping your toes into the market now can be a really good way also to prepare corporates for a more compliance based future in terms of coming to terms with what that looks like for a given organization.
00:29:31
Speaker
both in terms of liabilities in terms of carbon credits, but also as was mentioned about the opportunities in terms of how can we pivot value chains towards generating revenue through this market as opposed to just not just kind of, you know, donating it to to projects outside of your value chain.
Business Models and Private Sector Engagement
00:29:51
Speaker
Yeah, and I think there's also so I mean, on the other sort of side of the coin, or what are what are some of the opportunities in in generating or helping to generate some of these these types of of carbon credits. I think um in spite of, or actually maybe a little bit because of some of the you know potential flaws with the with the UN n agreement, there there is probably going to be a big increase in the the volume of
00:30:19
Speaker
carbon credits being generated and in in just the size of these these credit markets right now that there is more of an official procedure to to follow. So I think that you know we've seen some interesting things with like you know agricultural companies that are um providing services to farmers to help them you know say reduce their nitrogen fertilizer use or enhance ah soil carbon sequestration and actually you know providing discounts to farmers or funding funding some of these activities by generating carbon credits that they can that they can sort of sell on the other side. So I would expect to see you know those type of business models and those type of approaches becoming starting to become more common following following on this. is that a is that a Does that seem like a fair expectation to you?
00:31:08
Speaker
Absolutely, and to build off something that Alina said earlier, you know many see it as a get ah get out of jail free card, where it's really you know that we are moving into a space that is much more nuanced in terms of it's not just a liability, it's also this opportunity and the the companies and organizations that are doing that deeper thinking right across the value chain in terms of how they can engage in this space, you know are the ones best placed for the transition. We released a paper back in August looking at 12 different levers to and you know to develop durable CDR within a private sector organization. you know's so Offsetting was one of them, one of 12, but you know there's a full range of levers in terms of procurement right through to, you know we see some entities that are providing just catalytic climate finance
00:31:52
Speaker
ah whilst others are actually shifting their investments into the space. So, you know, no matter the type of organization you are, there are a number of levers. And I think the more you can credibly demonstrate that you've you're considering all these levers, the more it's possible to also, you know, be proud of the fact that you're also investing in common credit sources, kind of beyond value chain mitigation on top of that, and that you're demonstrably not relying on that as just a get out of jail free card.
00:32:23
Speaker
As we are, you know, maybe wrapping up or moving a little closer towards time, I'm curious, you know, what comes next, both realistically looking towards COP30, you know, a lot of projections are saying we're already way behind, you know, on the actions we need to take.
Road to COP30: Increasing Ambition in Contributions
00:32:38
Speaker
So I'm curious for your thoughts there, what's what's realistic. But also, um I'm curious, what isn't realistic or what would you do, you know, when you become the Supreme Leader and G of the world. um You can change one law or change one thing. What what do you think would be most impactful or or what would you most want to have happen um to move us on on a better track towards combating climate change?
00:33:04
Speaker
yeah Great questions. well so so you know Building off the first one, in terms of what we can expect for the year ahead, this year is a big year for you know revising the nationally determined contributions right through to 2035. This means that governments all around the world, back in their national capitals, are really thinking about Okay, how can we ratchet up our ambition? um Especially given that that ratcheting up was built into the Paris Agreement. um And so again, they'll be looking at the full range of mitigation opportunities that they have ah in their country, but also considering to what extent do they want to rely on Article 6, either to you know export credits or to import them into their nationally determined contribution.
00:33:48
Speaker
um And and so so that will be something to watch before COP30, especially as we're starting to see the first ah round of biennial transparency reports, which are the kind of Paris language we're just saying, you know, reporting on how well we're doing actually implementing the ah commitments that we've made. But yeah, again, it's a super interesting system because compared to the Kyoto Protocol,
00:34:09
Speaker
ah where only NX1 countries had you know these kinds of obligations to reduce their emissions. um Given that it's you know nearly every nation on Earth now, we have a much ah you know bigger role to play in terms of um ensuring that those commitments are not only becoming more ambitious, but that they're actually critically being implemented. And that implementation part, is as you said, kind of tends to be where these things get let down. And then kind of tied to this process of of while countries are considering their options to revise their nationally determined contributions, I think it's a great opportunity to actually separate at that national level
00:34:52
Speaker
targets for emission reductions as well as removals and then again different types of removals because only if we don't kind of keep mixing them all in together will we you know truly combat this um risk of perceived mitigation deterrence you know when when we see this the same at the corporate level where companies are accused of, you know, greenwashing because, you know, they've kind of mixed in carbon credits to mask the fact that they haven't been reducing emissions. When in essence, if all these things are separately reported and tracked, I think we can get really clear A, on the levels of where we are, and then B, how we can actually shift that in a way that is more net zero aligned, so both keeping an eye on
00:35:32
Speaker
ah reducing emissions as fast as we can, but critically also scaling up that removal part of the net zero equation so that we're on track likewise to meet that growing gap um that we've seen that we need to to reach by 2050 to keep the the Paris Agreement temperature goals in sight.
00:35:48
Speaker
Well said, and yeah, thanks thanks for for all of the the time and and and insights here. And Jay, that's just been really valuable enlightening conversation for ah for me and hopefully for all of you in the in the audience as well.
00:36:04
Speaker
So thanks to Inji for all sharing sharing her time and insights. Thanks to all of you for listening. If you you've been enjoying Innovation Matters, certainly ah love to have ah you rate and and and subscribe to the to the podcast on whatever platforms you're finding that that that helps us out and helps other people discover the show. And we will be back with more sustainable innovation discussion soon. So thank you all very much.
00:36:33
Speaker
Innovation Matters is a production of Lux Research, the leading sustainable innovation research and advisory firm. You can follow this podcast on Apple Music, Spotify, or wherever you get your podcasts. If you want more, check out www.luxresearchinc dot.com slash blog for all the latest news, opinions, and articles. so