4 April 2023
Key takeaways from IETA's European Climate Summit
Chief Research Officer
From 28th - 30th March we attended IETA’s European Climate Summit in Lisbon. The event was focused on bringing together policymakers, business leaders, and innovators involved in building, scaling, and collaborating on markets for net zero. At the event, we spoke on two panels and hosted our own side event with Kita and Patch.
Ronan Carr, Chief Research Officer, shares his top takeaways from the event.
Is the VCM still voluntary?
The word voluntary is becoming less relevant in the VCM moniker. Given the public commitments made by many companies to lower emissions and reach net zero, participation in carbon markets will be essential to reach these goals.
Over the medium to long term, more integration into compliance and regulatory markets is increasingly considered inevitable. Jurisdictions as diverse as Mexico, Washington State, and Singapore are taking steps in this direction already. The development of Article 6 markets may also lead down this path.
Carbon as an asset class
Speaking on a panel about ‘What’s on the Horizon for Financial Institutions and Carbon Markets?’, there was a lot of interest in how financial institutions could serve the carbon markets. With specific attention on the emergence of carbon as a new asset class.
The enthusiasm for carbon markets in the long term stands in contrast to the relatively weak secondary market conditions prevalent in the VCM over the past year.
During our own side event hosted by our Director of Carbon Ratings, Dr. Kirti Ramesh, there was a strong recognition of the important role information infrastructure will play in helping to scale this asset by providing transparency to the market.
The future of risk management in the VCM
Our Head of Carbon Removal, Ted Christie-Miller, spoke on a panel about ‘Scaling the Carbon Market Through an Effective Risk Framework’. During this discussion, there were a number of comments about how advances in MRV and accreditation, combined with the emergence of ratings and insurance solutions provide a model for the future of risk management in the VCM.
On the demand side, there is an increasing consensus emerging on the need to move away from project-specific “story-based” use of offsets and towards building a portfolio of carbon credits that balance and manage risks.
Ratings can feed into this process and it would complement emerging buyer frameworks such as the VCMI and SBTi.
The launch of the Core Carbon Principles marks a step forward for the market
At the conference, the IC-VCM held a briefing session for the launch of their Core Carbon Principles (CCPs).
As mentioned in our CCPs takeaway piece last week, the launch of the CCPs is a step forward for the market. By themselves, they won't solve all integrity concerns. But, ratings will be complementary and raising standards of disclosure is a key objective.
Building on regulation in the market there were also discussions around multiple new standards bodies coming into the market. All of which, further supports the need for ratings to make cross-market and method comparisons.
Removals are on the up
A number of key events were focused on carbon removals, specifically engineered methods, demonstrating the growing interest in how removals can help accelerate the transition to net zero.
Across the range of carbon removal panels, there is a general feeling that the VCM is likely to increase its share of removal credits, with several comments about how removals could fit into regulated markets in the years to come.