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.
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.
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“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.’”
Published Jul 22, 2024 8am EDT / 5am PDT / 1pm BST / 2pm CEST
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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