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As the climate crisis is accelerating and the pressure to act is steadily increasing, many companies are claiming themselves or their products carbon neutral. This is usually achieved by offsetting residual emissions with carbon certificates (carbon offsetting). However, recent revelations about the inadequate quality of carbon credits and legal uncertainties surrounding the use of such offset claims are increasingly raising doubts about this approach.
This Wuppertal Report examines how the EU can promote integrity in corporate climate action. Taking into account the new framework of the Paris Agreement, the paper outlines various options for how the EU could push for more integrity and effectively combat greenwashing through the targeted use of Article 6 of the Paris Agreement.
In their recommendations, the authors advocate addressing the most serious consequences of ongoing offset practices through increased regulation of offset claims. If a ban on offset claims cannot be implemented, claims requirements and carbon offset regulations should be further specified, for example, by prohibiting any type of double counting of emissions reductions. In addition to tightening the rules for corporate offset claims within Europe, the EU could help partner countries make informed decisions when approving climate change mitigation measures and respective carbon credits. The report also emphasizes the EU's special role in international climate negotiations, where it should advocate for a strong legal framework for climate action under Article 6.
Am frühen Sonntagmorgen des 20. November 2022 ging die 27. Konferenz der Vertragsparteien des Rahmenübereinkommens der Vereinten Nationen über Klimaänderungen (27th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), COP27) im ägyptischen Scharm El Sheikh zu Ende. Geplant war die Konferenz bis Freitag. Doch es gab viel zu diskutieren. Katastrophale Extremwetterereignisse wie die Überschwemmungen in Pakistan und historische Dürren in Europa unterstrichen auch dieses Jahr wieder die Bedeutung von ambitionierten klimapolitischen Entschlüssen. Auch der neueste Bericht des Weltklimarats (Intergovernmental Panel on Climate Change, IPCC) hatte erneut hervorgehoben, dass diese Ereignisse weiter eskalieren werden, je mehr die globale Erwärmung zunimmt.
Die Analyse erläutert die Funktionsweise des globalen Kohlenstoffmarkts und wie dieser von Unternehmen zur CO2-Kompensation bei der Erfüllung ihrer freiwilligen Klimaschutzziele genutzt wird. Vor dem Hintergrund der veränderten Rahmenbedingungen des Übereinkommens von Paris stellen die Autoren dar, mit welchen Herausforderungen der Kohlenstoffmarkt konfrontiert ist und wie diese durch Nutzung einer Alternative zur CO2-Kompensation überwunden werden können.
Offsetting enables countries and companies to meet part of their climate change mitigation obligations by using mitigation outcomes generated elsewhere - in lieu of own emission reductions. This report explores the future role of offset approaches and how they could be successfully integrated into a post-2020 climate regime by focusing both the supply and demand side. For this purpose, the report develops a conceptual approach that derives a normative vision of what should be considered a successful offset use in a top-down manner to then link this vision to specific factors on the ground in sectors and jurisdictions where offsets will be generated and used. It explores how these factors influence the successful operationalisation of the offset approach and how they can inform its design. In addition, the report also explores six conceptual design aspects to providing recommendations on how to take these factors into account during the design of the offset approach. Based on these findings, the authors derive overarching policy recommendations on the integration of offsets into carbon pricing schemes.
This report develops an evaluation framework that policymakers can use to identify whether offsets can add value and uphold environmental integrity of a compliance scheme. It uses a scoring framework on factors to: (1) identify which sectors have hard-to-abate emissions that can justify demanding offsets as cost-containment measures for ambitious climate policies; and (2) identify mitigation activities that are otherwise inaccessible, fosters sustainable development, and the extent to which it enables transformative sectoral action to be eligible to supply offsets. This evaluation framework identifies the optimal conditions that make factors successful in either having sectors demand offsets, or specific mitigation activities supply offsets. Sectoral emissions that are hard-to-abate are those that are technically unavoidable due to a lack and maturity of technologies, and therefore should be allowed to have cost-containment measures - such as offsets - to avoid adverse economic ramifications such as carbon leakage. Mitigation activities that can supply offsets are those that are currently inaccessible to local actor’s due to lack of access to technology, finance or capabilities. Allowing these mitigation activities to be eligible to supply offsets allows to pilot such activities and realize mitigation outcomes outside the original scope of the compliance scheme. This report has chosen selected sectors and mitigation activities to illustrate how this framework can be applied at the global level. It recognizes that country-specific factors can change the assessment of whether the offset approach will add value and uphold environmental integrity to proposed compliance schemes of a country. The report further proposes practical steps policymakers can do to undertake an evaluation at the national level.