SHARM EL-SHEIKH, Egypt, Nov 7 (Reuters) – The USA needs companies to pay international locations to cease burning coal by way of carbon markets, in a proposal it would announce on the United Nations local weather convention this week, individuals conversant in the matter mentioned.
The initiative, anticipated to launch on Wednesday on the COP27 Summit in Egypt, proposes that firms purchase carbon credit and the proceeds be used to fund renewable power initiatives in international locations searching for to switch fossil fuels akin to coal, the individuals mentioned.
High U.S. local weather diplomat John Kerry has been canvassing firms in sectors together with banking, client items, transport and aviation on the proposal, the individuals mentioned. The thought is that firms would take part voluntarily.
The U.S. State Division didn’t instantly reply to a request for remark.
Voluntary carbon markets are increasing quickly, whereby credit are generated by actions together with tree planting and solar energy initiatives, though considerations persist about these credit being exterior regulated markets. The voluntary market was valued at round $2 billion in 2021, nearly quadruple the earlier yr, in line with information supplier Ecosystems Market.
One incentive for an organization to take part within the proposed scheme is that it may assist scale back its personal emissions stability sheet, assuming the corporate has operations in a rustic that’s phasing out coal. Corporations don’t essentially have massive operations that they should decarbonize in international locations taking a look at transition offers akin to Indonesia and Senegal, nonetheless.
Fossil gasoline producers are excluded from taking part within the proposed scheme, the individuals mentioned, though the business has been one of many largest customers of carbon markets up to now.
“Crediting of power transition in a rustic is an attention-grabbing idea however a number of the restrictions on participation must be labored on if it will have any scale,” mentioned Dirk Forrister, chief government of the Worldwide Emissions Buying and selling Affiliation.
“Proper now, the thought is it must be narrowly utilized to be purchased by non-fossil gasoline firms like tech firms and banks, which might prohibit personal sector demand.”
Extra reporting by Kate Abnett
Modifying by Mark Potter
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