The plan, announced Wednesday by U.S. climate envoy John Kerry at the COP27 climate summit in Egypt, essentially amounts to tapping private funds to finance developing nations' transition to clean energy by selling "high quality" carbon credits to companies trying to make their carbon emissions "net zero.
The developed world needs hundreds of billions of dollars to help them ditch coal, oil and natural gas, but the United States Congress has been reluctant to spend much in financial aid. Details about how it will work are still sparse, but under the plan, verified greenhouse gas emission reductions would be generated that could then be sold as carbon credits. Kerry said there's been "strong interest" to buy them from corporations including PepsiCo and Microsoft.
Carbon credits have evolved into a multibillion-dollar market for companies, governments and individuals who want to reduce their carbon footprint. But they've also become a source of controversy among environmental and climate activists, who say they're problematic because there's no guarantee they'll deliver on reducing emissions.
On Tuesday, a UN expert panel warned that tougher standards were needed to fight back against greenwash by companies and investors making net-zero pledges, including a ban on businesses and local governments buying cheap carbon credits that lack integrity instead of deeply cutting their own emissions.Mohamed Adow, director of Power Shift Africa, a climate and energy think tank, called carbon offsets an "accounting trick" that paves the way for big polluters to carry on polluting.
Climate scientist Bill Hare of Climate Analytics, who was on the United Nations expert panel, said the proposal shocked people at the climate summit and upset many governments.
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