In Short : A carbon offset scheme led by the US is set to debut in April 2024. This initiative reflects global efforts to combat climate change by encouraging activities that reduce or counteract greenhouse gas emissions.
In Detail : The Energy Transition Accelerator (ETA), a global initiative to use money from the voluntary carbon market to help developing countries decarbonise their energy sectors, is set to be launched in April 2024.
The ETA is being developed by the US State Department, the Rockefeller Foundation, and the Bezos Earth Fund, on 3 December issued a framework for how it could bring together developing nations and corporate buyers to support faster energy transition efforts with the sale of high-integrity carbon offsets.
The work on translating that framework should be done by Earth Day on 22 April next year, and the “ETA will be formally established as an independent initiative ready to do business,” US climate envoy John Kerry said at the Cop 28 climate talks in Dubai.
The programme, first announced last year at Cop 27 in Sharm el-Sheikh, Egypt, aims to allow host jurisdictions to generate carbon credits by undertaking efforts to decarbonise. These efforts could include accelerating the retirement of coal-fired power plants, building new renewable generation and improving the electric grid. Participating companies, as well as other governments, would commit to pay for those credits.
The ETA’s preliminary estimates show that the programme could mobilise $72bn-$207bn in energy transition finance by 2035.
As part of the announcement, the governments of Chile, the Dominican Republic and Nigeria said they would participate in the ETA as pilot countries, and the Philippines expressed interest in participating.
In addition, a dozen companies — Amazon, Bank of America, Boston Consulting, Mastercard, McDonald’s, Morgan Stanley, PepsiCo, Salesforce, Schneider Electric, Standard Chartered Bank, Trane Technologies, and Walmart — have expressed interest in continuing to engage with the initiative ahead of the formal launch.
The framework, developed over the past year, describes the initiative’s objectives and key elements, such as criteria for how companies can use the offsets to help meet their voluntary climate commitments, just transition provisions to address worker and community needs, and plans to use some funding to support adaptation and resilience efforts in vulnerable countries.
One of the top concerns is ensuring that the offsets generated by participating countries are high integrity credits. The ETA plans to address this by adopting its own sectoral-scale crediting standard for emissions reductions from electricity generation, a draft version of which Winrock International released on 3 December.
“All of the companies up here care at least as much if not more about integrity. Because the last thing any of us want is to be accused about greenwashing,” said PepsiCo’s chief sustainability officer Jim Andrew.
The standard would offer three separate crediting approaches to account for different circumstances in participating nations. The draft includes approaches for absolute emissions reductions, emissions rate reductions, and a third approach to be developed for countries with low per capital electricity access, low per capita consumption and limited grid development.