Why the math behind carbon markets might not math

Your guide to the political forces shaping the energy transformation

Sep 25, 2024 View in browser   By Arianna Skibell Activists urge world leaders to "tear down the pillars of fossil fuels" as part of a climate demonstration Friday in New York City. | Alex Kent/AFP via Getty Images The Biden administration hopes to use voluntary carbon markets to help supply international climate aid. The only problem is the economic tool might actually make climate change worse. Dozens of carbon market leaders, including buyers, sellers and portfolio managers, have descended on New York for Climate Week with the goal of convincing the public otherwise, write Chelsea Harvey and Sara Schonhardt. The PR blitz aims to spotlight the potential of voluntary carbon markets and reflects the industry’s continued struggle to gain legitimacy. How markets work: Climate-friendly projects generate credits that polluting companies or individuals voluntarily buy to cancel out their own carbon emissions and meet their climate goals. The Biden administration is encouraging the use of these carbon markets to finance ballooning funding needs for international mitigation projects, such as planting mangroves on low-lying Pacific islands, building solar farms to replace coal-fired power in Asia and protecting storm-battered countries globally. The U.S. has for years struggled to meet its climate finance pledges. But the pay-to-pollute model only works if the new climate projects meaningfully reduce greenhouse gases and would not have been built otherwise. Numerous studies and investigations have found that these carbon markets are littered with projects that do little to address climate change. Amid these concerns, carbon markets have seen a sharp drop in value. Demand for carbon credits shrank from nearly $2 billion in 2022 to about $700 million in 2023, according to Ecosystem Marketplace, a nonprofit initiative focused on environmental finance. Supporters, including the Biden administration, are coalescing around broad guardrails to increase the markets’ transparency and efficacy. Big picture: Even with such efforts underway, critics warn that the ability to buy pollution credits, even effective ones, may discourage polluters from directly reducing their own carbon emissions — an action scientists say is needed to stave off the worst of climate change. “As long as it’s being used as permission to pollute, it’s not actually contributing to climate mitigation,” Danny Cullenward, an energy policy expert at the University of Pennsylvania, told Chelsea and Sara.   It's Wednesday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Arianna Skibell. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to askibell@eenews.net. Listen to today’s POLITICO Energy podcast Today in POLITICO Energy’s podcast: Ben Lefebvre and Annie Snider break down the nation's first leak at a carbon injection plant and how that's playing into the ongoing debate about who should permit carbon capture projects. Pittsburgh, not Paris Democratic presidential nominee Kamala Harris speaks at the Congressional Hispanic Caucus Institute leadership conference Wednesday in Washington. | Jacquelyn Martin/AP In a speech today in Pittsburgh, Vice President Kamala Harris pitched voters on a manufacturing revival to boost the middle class. Like President Joe Biden, she emphasized the necessity of investing in the domestic production of emerging technologies and clean energy to lift the economy. She also called for faster approvals of permitting for energy projects — a feat that lawmakers from both parties have spent years trying (with little success) to accomplish. The afternoon address follows weeks of calls by pundits and even some supporters for more details about her policy agenda. Power Centers President Joe Biden speaks after touring the Taiwan Semiconductor Manufacturing Co. facility in Phoenix on Dec. 6, 2022. | Ross D. Franklin/AP Biden bucks greens and Democrats Biden plans to sign a new bill that weakens some environmental requirements for federally funded microchip projects, bucking environmental groups and House Democratic leaders, write Brendan Bordelon, Christine Mui and Kelsey Brugger. The bill's enactment would mark a major win for the microchip lobby, which for nearly two years has been trying to dilute the environmental impact rules attached to the Biden administration’s multibillion-dollar funding program for microchip plants. Environmental groups say the measure is a giveaway to the chip industry that threatens the environment. Climate change fueled European flooding Scientists are warning that burning oil, gas and coal increased the probability and ferocity of flood-bringing rains in Central Europe, writes Zia Weise. The rising waters that killed at least 24 people from Poland to Romania this month were twice as likely to occur in today’s climate than in a world without man-made global warming, according to an analysis published Wednesday. In Other News Brace for impact: Helene, now a hurricane, is gathering strength — and is still projected to strike Florida's Gulf Coast as a major hurricane Thursday. Adapting to climate disasters: National Football League stadiums will soon double as disaster shelters, federal officials say. Lithium rush: Deja vu comes to Arkansas as lithium follows oil. Subscriber Zone A showcase of some of our best subscriber content. Biden speaks about climate at the Bloomberg Global Business Forum in New York on Tuesday. | Manuel Balce Ceneta/AP The Biden administration has launched an “environmental justice” climate corps as it continues to expand its job training program for young workers. California Gov. Gavin Newsom signed a trio of oil and gas bills Wednesday in Los Angeles that will clamp down on in-state production in the nation’s seventh-largest oil-producing state. EPA’s climate rules for power plants could shutter many of the nation’s largest sources of greenhouse gas emissions by 2039, a new report shows. That's it for today, folks! Thanks for reading.   Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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