John Kerry makes his move on private climate finance
The U.S. is teaming up with philanthropic and corporate heavyweights to pitch a new — but controversial — carbon credit system to boost private finance for low-carbon energy in developing nations.
Driving the news: On Wednesday, U.S. climate envoy John Kerry — along with the Rockefeller Foundation and the Bezos Earth Fund — unveiled plans for the "Energy Transition Accelerator" at the COP27 summit.
- PepsiCo, Microsoft, Bank of America and others have expressed interest, the U.S. announcement states.
- "We're hearing strong interest from developing countries," Kerry said in Sharm el-Sheikh, Egypt, this morning, citing Nigeria and Chile.
How it works: It's designed to enable the sale of high-integrity carbon-reduction credits to finance new and rapid renewables deployment and retire coal-fired power plants.
- "This is an approach that can deliver deep and rapid emission reductions. It can convert those reductions into high-quality carbon credits," Kerry said in Sharm el-Sheikh, Egypt this morning.
- It would not be open to fossil fuel companies, Kerry said.
- Participating companies must have net-zero goals and science-based interim targets. And credits must supplement — not substitute for — emissions cuts, the proposal states.
- "It's not going to let anybody off the hook," Kerry said.
Why it matters: Huge amounts of public and private money are needed to keep the Paris targets within reach.
- The U.S. cites International Energy Agency estimates that investment needs to exceed $4 trillion annually by 2030 to create a net-zero emissions pathway by 2o50.
- For months prior to COP27, Kerry has spoken out about the need to attract large sums of private sector money to join in the climate fight.
- "Unfortunately, some past abuses have in many minds discredited the use of a carbon credit. But we also know that with the right safeguards, with the right transparency, the right accountability...this can be done well," Kerry said.
The intrigue: The U.S. proposal comes a day after a UN-backed panel unveiled a series of safeguards against greenwashing via carbon credits.
- Kerry said he met with UN Secretary-General António Guterres, who expressed interest provided strict rules and transparency are included.
What's next: Kerry said the goal is to have the ETA up and running by the next big UN climate summit, in one year.