Circular Economy

Antonioli:
Carbon Markets Must Center on Long-Term, Sustainable Development Impacts

Former Verra CEO David Antonioli believes the carbon market is missing a golden opportunity to design and deploy carbon finance as a powerful transitional tool toward a zero-carbon economy. He outlines his vision in a new, six-part report.

By Christian Yonkers | Published 4 months ago | About a 6 minute read

Image: Sven Huls

The integrity of the voluntary carbon market (VCM) has been called into question in recent years as awareness has grown of the prevalence of low-quality offset projects — which, at best, exaggerate their claims of removing climate-changing emissions; and at worst, can do more harm than good. Companies are becoming rightfully wary of offsetting, and many opponents believe offsets shouldn’t be a part of meaningful carbon-reduction strategies.

A new, industry-insider report offers a critical look at the current state and future potential of carbon markets, from a 30-year veteran in the climate space. Financing the Transitions the World Needs: Towards a New Paradigm for Carbon Markets — from former Verra CEO David Antonioli’s new venture, Transition Finance — reframes the VCM within the lens of accelerating the transition to a net-zero economy; the first chapter setting out a vision and theory of change, and subsequent chapters providing concrete details and examples.

In the report, Antonioli encourages people to view carbon credits as catalysts for a sustainable global economy; but he argues that the existing market must adopt a transitional approach focused on providing the critical, early financing required to introduce novel technologies and practices, lower costs, de-risk investments and scale climate solutions for a livable, just future.

When Antonioli started his previous position at the world’s leading carbon-offset standard-setting organization 14 years ago, he was confident a top-down approach would prevent what was then thought to be a far-off climate crisis.

“We were all convinced that we were going to have cap and trade,” Antonioli told Sustainable Brands® (SB). “There was new regulation everywhere. The Europeans were going to tighten the screws, the Chinese would come along … and the world would have a top-down solution with regulations, taxes, cap and trade.”

Instead, Antonioli watched in alarm as critical goals continued to be missed — leading to year-on-year increases in emissions. Carbon credits were originally designed to price carbon and help companies meet emissions targets, and it’s still their primary function. But Antonioli believes the market is missing a golden opportunity to design and deploy carbon finance as a powerful transitional tool toward a zero-carbon economy.

As he writes in the report: “What if we thought of carbon as a means to an end, rather than the end in itself? For example, what if we use carbon finance to introduce new technologies and/or practices up until the point that new interventions no longer depend on this additional source of finance?”

In other words, what if carbon credits helped organizations meet emissions goals and catalyzed entirely new and self-sufficient, sustainable industries? Today’s carbon markets start and end with a ton of carbon, with little consideration of long-term impacts after the crediting period ends.

“Unless we design this market to achieve that broader objective, we risk getting to the end of projects’ crediting periods and facing a situation where the underlying activities stop or do not scale,” the report asserts.

Antonioli is encouraged by the work of bodies such as the Integrity Council for Voluntary Carbon Markets to bolster confidence in the market. But he’s still concerned that the very nature of the carbon market is fraught with an existential problem.

“We're still not designing the market specifically or explicitly to ensure the kinds of transitions that we really need,” Antonioli told SB. “We need to expand our view to say, ‘What are the businesses of the future that actually can sustain themselves over time?’”

Unless the carbon market is designed with enduring impact in mind, “there's a high likelihood that it's going to fall apart,” Antonioli stated. “You can't drive the kinds of investment that we need if everything is going to be based on the next individual project. People don't make big bets if you don’t have long-term vision and you really enable the transformation of markets and sectors of the economy.”

Last year, the world came dangerously close to reaching 1.5°C — the maximum, allowable temperature increase before the effects of climate change become catastrophic and irreversible. Offsetters need to get their act together and start catalyzing change, fast.

“Let's use carbon to transform sectors of the economy,” Antonioli said. “And if we have a game plan to ensure that transition, then it's more likely we’ll get the kind of scale [of change] that we need.”

Carbon markets should generate high-quality credits while propelling essential and underfunded climate solutions into inevitable, positive tipping points where they achieve a new irreversible, sustainable state. A positive tipping point in this context refers to a technology’s or practice’s critical mass of market penetration and adoption. At this point, the technology takes off on its own legs — pushing old technology into obsolescence. Antonioli believes this is essential for the transition of the world’s economy — offering security to financers that their investments will continue to pay dividends even after the crediting period ends.

“What I am proposing is … we look at the sector and we do some rigorous scrutinizing of the data and the sector; and we identify work activities that are not taking place that you do have to change,” he explained. “Then, what do we need to get to a positive tipping point — what's that trajectory look like? And let's define that abstract so that we can then have the long-term view and enable investment at scale.”

This framework might not work for every industry. Antonioli admitted it’ll take research, investment and collaboration to make a streamlined-transition carbon-crediting framework; and in the end, some credits that exist today might not exist in the future. Nature-based credit generation is an area Antonioli thinks is an ideal place for his theory of change to be applied.

“If I were a buyer … I’d want to know if there's some sort of long-term projection — particularly, if I'm … a consumer-based company … where I get stuff from the land. This now allows me to invest in sectors of the economy that are going to benefit me, because I'm going to have sustainable supply chains. So, it makes a lot of sense for those companies to be investing in the natural solutions area.

“Ultimately, we need create a better narrative,” he concluded. “But if it's really going to drive the kinds of change that we need, I think we need to be explicit about what we're trying to achieve and design it into the market so that you see that. I worry that if we don't, then we'll be caught again looking back over the years, saying, ‘Oh, we did a bunch of content, but we didn't really have an objective.’”

Christian Yonkers

Christian is a writer, photographer, filmmaker, and outdoor junkie obsessed with the intersectionality between people and planet. He partners with brands and organizations with social and environmental impact at their core, assisting them in telling stories that change the world.

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