Policy news round up - June 14 2023

Here is our rundown of the top policy stories from the past 2 weeks:

1. Papua New Guinea (PNG) community takes project developer to court to nullify the sale of 1.3 mln credits

• Summary: Landholders in PNG have lodged a claim in the country’s National Court to revoke the sale of 1.3 million Verra-issued carbon credits they argue were illegally sold by controversial REDD+ project developer New Ireland Hardwood Timber (NIHT). Full text here.  
• So what? Continuing a trend seen in stories over the last few weeks, this is another court case over conflicts between developers and Indigenous People and Local Communities. Land tenure has always been a concern for REDD+ projects, but this recent round of legal action may represent an increasing risk area for projects. Revoking 1.3 million credits would be a significant outcome.

2. Kenya county governor revokes ‘opaque’ carbon offset deals, local media reports

• Summary: The governor of Kenya's Kajiado has ripped up all carbon offset deals signed with projects in the county on grounds they were too opaque for local communities, local media reported, in another signal of growing government intervention in the global voluntary market. Full text here. 
• So what? Another story on the theme of local control and protecting host country interests. After last month announcing new legislation to ensure more carbon revenue stays in the country, Kenya's government is now taking a further step to protect local interests. This latest development only applies to a specific county in Kenya, and is expected to be challenged in court. But this is another story that could be an indicator of wider things to come across more host countries.

3. China may take further action against CBAM after upcoming WTO discussions -analysts

• Summary: China's next step against a planned carbon border tax may hinge on discussions under the World Trade Organization (WTO) scheduled for this month, where the EU will have to defend the measure's legality, according to analysts.Full text here. 
• So what? Right from its inception there have been questions about whether the EU's CBAM would comply with international trade rules. Although there were positive stories last month about how a CBAM might accelerate China's action on carbon markets, it seems their preference is to challenge the mechanism, through the WTO. However, the mechanisms seem to be having their intended effect on other countries such as India - which is looking to negotiate with the EU directly while it introduces a domestic carbon market.

4.EU ETS cut emissions not employment in early years -study

• Summary: The EU’s flagship emissions trading scheme (ETS) led to a reduction of carbon emissions of around 10% between 2005-12 with no adverse impact on employment, according to a recent study.Full text here. 
• So what? This OECD paper provides a compelling argument that decarbonization need not be a negative for businesses and that carbon markets are an effective way to achieve that. The authors do caveat that this data was only looking at data from 2005-2012 and that more recent data might see a different trend as the price of allowances rose

5. Lawmakers eye splitting of issues under EU’s carbon removals bill

• Summary: Lawmakers are weighing whether the EU's law to certify carbon removals should make a clear distinction on how policy will support land-based carbon sequestration compared to more durable solutions, with experts eyeing a role for the latter in the bloc's flagship carbon market. Full text here.
• So what? The EU's carbon removals framework aims to deliver a common standard for removals and a reliable certification framework, but is taking longer than initially expected to agree as lawmakers get stuck in the weeds. However, it would be monumental if credits of any kind are all allowed back into the ETS, both as a source of demand and as a mark of confidence in voluntary credits.

6.​​US airline faces legal action over ‘carbon neutrality’ claims

• Summary: US airline Delta Air Lines is facing a lawsuit in California for "grossly misrepresenting" its environmental claims, in particular, how it uses carbon credits to offset the company’s greenhouse gas emissions. Full text here. 
• So what? The lawsuit hinges on the credibility of the credits used, claiming that Delta 'grossly misstated the actual carbon reduction achieved by their carbon offset portfolio'. So this isn't a reason for companies not to use credits, just to use high quality credits and make transparent claims. And airlines still seem to realise they will be relying on offsets for a while - this week Qantas has shared its plans on using carbon credits (having previously appeared to move away from offsetting).

7. The CEO of Qatar Airways has described the airline industry’s emissions goals as a “PR exercise”, saying aviation is on track to miss its target to achieve net zero status in 2050

• Summary: “Let us not fool ourselves,” Al Baker told CNN’s Richard Quest. “We will not even reach the targets we have for 2030, I assure you.” IATA has pledged to boost the use of SAF by 2030, with a goal of becoming net zero in 2050. However, Al Baker insists the industry’s targets are unrealistic, given the current volumes of SAF being produced, and says the airline industry is in denial about the rate of progress. Separately, consulting firm Bain & Company  also questions commercial aviation’s ability to reach net zero by 2050. Full text here. 
• So what? On the day that the IATA announced a roadmap to reach net zero carbon emissions by 2050, this was probably not the headline they were hoping for. SAF and hydrogen/ electric planes are still a long way from being scalable solutions. Through CORSIA the aviation sector is likely to be a big source of demand for credits in the medium term, although the ruling with Delta shows they will have to be careful with how they talk about their use of credits 
  

8. Considerations for accessing high-quality carbon offsets as part of the Net Zero transition

• Summary: A PWC report found that the cost of carbon credits could double by 2030, requiring companies to take steps to mitigate the impact of net zero targets on their profits, as well as requiring greater transparency on their carbon credit purchasing strategies.Full text here. 
  

• So what? A story that's been picked up by some mainstream papers.The reporting mentions some of the recent negative coverage of VCMs and avoidance credits in particular. In general reporting reflects there is still mainstream interest in voluntary markets but widespread confusion about their role in the net zero transition

9.EU lawmakers push to force companies to disclose carbon footprint in milestone vote

• Summary: The European Parliament is set to back measures to force EU companies to disclose their carbon footprint and take steps to reduce it as part of corporate sustainability requirements to be voted on next week. Full text here.
• So what? The EU's new disclosure rules are shaping up to be world-leading (or at least on par with the proposed SEC rules). This story comes in the same week that a report found that half of the world’s largest corporates have not set climate targets. It's a good example of how regulation can accelerate progress on issues such as climate.

See a bonus climate story of the week: 

10.El Niño planet-warming weather phase has begun

• Summary: The El Niño Southern Oscillation (ENSO) is the world's biggest fluctuating climate system. It's linked to how winds and currents interact in the tropical Pacific, affecting wider ocean circulation and weather patterns. This video from the UK met office gives a useful overview. El Niño refers to a reversal in the usual prevailing winds and currents, resulting in changes in rainfall, warmer temperatures across lots of the southern ocean, and wider weather and climate effects felt around the globe.Full text here. 

• So what? El Niño periods are usually when global temperature records are broken and are often associated with a rise in extreme weather events. The only positive that can be said for this is that it might bring more attention to the climate crisis and therefore accelerate international actions on mitigation and adaptation.