US plan to tap companies for green finance faces pushback
SHARM EL-SHEIKH, Egypt — When it comes to helping poor nations cope with climate change, the United States government left its wallet at home. So it hopes big business can help pick up the tab.
Unable to persuade Congress or the American public to spend billions of dollars more a year in climate financial aid, the U.S. government is trying to make it easier for private corporations to send cash to the developing world in exchange for looking green at home.
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.”
“Our intention is to put the carbon market to work, to deploy capital otherwise unemployable, to speed the transition from dirty to clean power,” and replace dirty coal-fired power plants with renewable energy sources, Kerry said at a launch event.
But the idea faced stiff resistance from environmental groups and climate experts, who said it would give polluters a license to keep polluting. It came a day after the United Nations warned about shady carbon credits that businesses count on to meet net-zero targets.
At this year’s summit, poorer nations have lambasted wealthier ones for not putting up enough money to finance their so-called green transition.
The developed world needs hundreds of billions of dollars to help them ditch coal, oil and natural gas, but the U.S. Congress has been reluctant to spend.
“If we don’t find more money ... we ain’t going to get this done,” Kerry said of the fight against climate change.
Kerry’s proposal is dubbed the Energy Transition Accelerator and
is backed by two major philanthropies, the Rockefeller Foundation and the Bezos Earth Fund. They hope it could unlock $100 billion or more in financing for green projects by 2030. Kerry said he wants to have it up and running by next year’s COP summit, scheduled to be held in the United Arab Emirates.
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 has been “strong interest” to buy them from corporations including PepsiCo and Microsoft.
There would be “strong
safeguards” on who could buy the credits, Kerry said. Buyers, “not including fossil fuel companies,” will need a goal for getting to net-zero carbon dioxide emissions and a sciencebased interim target on the way to meeting that goal, he said. The credits can’t be used as substitutes for making deep cuts to their
own emissions but as an extra boost to those efforts.
Unlike other carbon credits criticized as prone to abuse, these credits would only be allowed to be used to phase out coal power plants in developing nations and creating more renewable power, and would be time limited, Kerry said.