LONDON, Dec 7 (Reuters) – The World Bank and partners including Singapore launched a global tracking system on Wednesday to help developing countries quickly and cheaply mobilize much-needed climate finance to clean up the opaque market for carbon credits.
Carbon credits — generated by activities such as planting forests or pulling climate-damaging carbon dioxide from the atmosphere — are sold to polluters to offset their emissions as a way to help reach net-zero emissions to limit global warming.
As governments wrangle over trading rules for so-called compliance credits, projects are launched to create new credits and countries set up registers to track them.
Private-sector efforts have also emerged to offer credits for “voluntary” carbon markets, while a range of registries such as VERA and the Gold Standard accredit and track them.
The $2 billion voluntary market remains small. Critics cite concerns including poor market transparency, limited supply of credits and questions about the quality of projects.
A new database – the Climate Action Data Trust (CAD Trust) – aims to address these issues by combining all project and carbon credit data in one place and making it free to the public.
“Our goal was to create this global, common data layer that would allow people to better understand what’s happening around the world, across different jurisdictions and through different programs,” said Chandra Shekhar Sinha, an advisor to the Climate Change Group. The World Bank told Reuters.
“We can track it and avoid double counting (and) find out what innovations are happening,” hoping to create a “race to the top” while lowering barriers to entry to the market. Participants.
The CAD Trust, co-founded with the International Emissions Trading Association (IETA), will provide a platform listing the various existing carbon offset registries to make it easier for companies and countries to share data.
Sonam Tashi, chief planning office at Bhutan’s Ministry of Economic Affairs, told Reuters the new CAD Trust portal could save the country about $1 million in initial market entry costs compared to the cost of setting up its own systems.
“It really helps us … jumpstart the whole learning process. It gets what’s needed in the carbon market faster,” he said.
He said Bhutan is in discussions with buyers who want details on how it registers, verifies and monitors carbon credits from its forests.
This is where the World Bank facility helps us,” Tashi said. “CAD Trust meets all technical requirements of host countries and buyers.”
Using the CAD trust means it is possible to start selling credits to Bhutan in 2023 — a year earlier if the country had not been able to access the facility, he said.
Reporting by Susanna Twidale and Simon Jessop; Editing by Katie Daigle and Lisa Schumacher
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