David Antonioli’s Post

Another very insightful chapter on the thorny issue of Additionality ! David’s take on the Diffusion of Innovations theory is a good suggestion of how to move things forward, particularly using the Positive Tipping Point (PTP) as the point when no additional carbon finance is needed.  This complements the concept of Sensitive Interventions Points proposed by Cameron Hepburn – i.e., the point when we can take an action to shift the system to move the system towards a PTP. With relation of the "number of reasons why the add tool needs to be reinvented”, I would add the problem that the current tools may be resulting in a larger number of false negatives than of false positives blocked. This is what our current research in Oxford is focusing on (Min Ruan, Sam Fankhauser). The idea is to adopt positive lists with carbon yields calibrated for additionality of the sector, as opposed to the individual projects. It is about time we face this challenge head on, as opposed to sticking to dogmatic and outdated approaches. Mark Kenber, Marc Stuart, Charlotte Streck, Rodrigo Bezerra, Janaina Dallan, Enric Arderiu Serra, Pablo Fernandez, Jose Tumkaya #carbonmarkets, #additionality, #vcm

I appreciate the reflection here and recognition of the need to rethink a concept that has plagued carbon markets, and yet is so central to how many operate today. However the ideas here to work around this quandary seem to be missing a critical piece: we can still freely emit CO2 into the atmosphere, and in fact subsidize industry sectors emitting GHGs at a far greater rate than any of the transition finance to drive down costs to meet the “positive tipping points”. There is no true cost to the positive or negative externalities. Further, is the financial additionality rule unwittingly penalizing early adopters and savvy operators capable of running an already profitable business who would produce more value if the incentive were there? We might see things as a world differently where such a pricing scheme and paradigm existed- where emitting CO2 necessitated balancing it, and environmental “goods” and “bads” were appropriately priced. Isn’t this the point of “net zero”? Without that level of boldness, we will just be rearranging deck chairs on the Titanic.

Check out this piece by my friend David Antonioli on new ways to think about carbon and additionality. It is an incredibly important discussion and David proposes a very interesting new approach. While it may smack of heresy to many in the carbon market, I think there is something to what he proposes. In fact, heresy may be just what we need in these markets. Put any number of carbon wonks in a room and within ten minutes (if that) I can virtually guarantee that they will be talking about the A word, additionality. Essentially, this relates to the question of whether an emissions reduction or some form of carbon capture claimed by a carbon project would or would not have happened if it wasn't for the carbon market. It makes sense, if the carbon benefits would have happened anyways, well should they get credit for it? As seemingly simple as the concept sounds, it is devilishly difficult in practice. There is a reason why most of the attacks on the credibility of the carbon market (though not all of them) focus on the additionality of the projects. After all, who can tell what would have happened in an imaginary counter-factual world where the project didn't exist. Sure, a forest could have been protected in the absence of the carbon markets and therefore maybe the project and its carbon claims are not additional. But if the forest is on private land, it could just as easily be that something changes and the forest could have been turned to paper and subdivisions. Who can predict the future. We assume the future is just a continuation of what we see today, but that isn't always the case. Things change, sometimes radically. Given this conundrum, what David proposes is that we think of the carbon markets differently. Rather than worry about what would happen in some possible future, why don't we imagine the future we want and see how we can use the carbon markets (and the finance they provide) to get there. Why not use the carbon markets to make some much needed transitions (think the transition to renewable energy or electric vehicles, or less deforestation, whatever). He notes that many (if not all) transitions happen in phases with the innovators coming in first (and they tend to be about 2.5% of the population), early adopters coming in second (something like 13.5% of the population), then the early majority, then the late majority, and finally the laggards. So a standard bell curve. There is lots of research that shows that once the early majority takes up a practice (again, think solar, electric cars, iPhones, whatever), then the process has its own momentum. So David makes the reasonable argument that perhaps we should use carbon money to help fund and facilitate this transition, bridge this chasm for desirable outcomes. Perhaps, he argues, this is a better metric than the ever-quixotic concept of additionality. Again, makes sense and it just might be what is needed. Take a look. All hail the heresy (and the heretic).

📣Thank you for all the fantastic conversations following the release of the second chapter of my report last week. Today, I am pleased to share the third instalment of ‘Financing the Transitions the World Needs: Towards a New Paradigm for Carbon Markets’ with you. Allow me to present… Chapter Three: Embracing Government Participation. The first chapter of the series introduced the concept that the carbon market needs to be redesigned in a way that the limited finance it provides can serve as a catalyst to enable the long-term transition of sectors of the global economy.  In the second chapter, I presented concrete suggestions for how we can rethink additionality to both unlock more finance for the kind of systemic change that is needed AND recalibrate the narrative around carbon markets. Now, in chapter three, I make the case for embracing government participation in the voluntary carbon market. Why? Firstly, some project types will not be able to generate sufficient revenues in the long run to be self-sustaining, and as a result will likely need government support. Secondly, carbon markets (if structured properly) could help countries achieve their nationally determined contributions (NDCs) by filling a critical resourcing gap needed for the long-term green transition. In this chapter, I also introduce a new concept that could strengthen the architecture of the Paris Agreement. Find out more in the full chapter below 👇 If anyone missed the release of the previous chapters, you can find them here: >> https://lnkd.in/eW_2_BBC Check back at the same time next week to read Chapter Four: Integrating Natural Climate Solutions. Amy Bann, Anna Lerner Nesbitt, Charlotte Streck, Donna Lee, Jen Stebbing, John Paul Moscarella, Mark Kenber, Pedro Moura Costa, Renat Heuberger, Ricardo Bayon, Siddarth Shrikanth, Tim Moore, Rich Gilmore, Alexia Kelly. #CarbonTransitionTool #VoluntaryCarbonMarket #CarbonCredits

Climate finance serves as a crucial support system for projects combating climate change. At its core is "price," a fundamental concept that shapes our endeavours profoundly. Pricing mechanisms like carbon taxes and cap-and-trade systems incentivize emission reductions and promote investment in cleaner technologies. They guide financial resource allocation for climate projects, assess investment viability, and inform policy decisions. These mechanisms also drive market development for carbon credits and renewable energy certificates, fostering innovation while ensuring fairness and resilience in climate finance. Carbon pricing integrates the true cost of emissions into our economic framework, employing taxes or cap-and-trade systems to guide companies towards environmentally sound choices. It transcends mere financial considerations; it reflects our commitment to safeguarding tomorrow.   Instruments such as green bonds symbolize optimism, assessing risks and rewards in our pursuit of sustainability. The social cost of carbon quantifies our impact, informing policies that safeguard our planet. These prices serve as beacons, directing us towards a future of cleaner, more vibrant possibilities.  Equity serves as our guiding principle, ensuring fairness in distributing benefits across all communities, fostering resilience in the face of challenges. Our pricing strategies must be equitable, nurturing progress while protecting the most vulnerable. In these principles, we chart a course towards a world where every investment secures a future we can proudly inherit. #Climatefinance #Investmentbanking

It's been a while since I've been on here but, just read a great article on the fundamental need for green bonds and their global issuance growth. Article was written by Bram Bos, a lead PM at GS, highlighting how green bonds are driving both infrastructure and climate goals forward, all while uncovering the financial advantages within an investment portfolio. Let me know what you think, would love to get some opinions on this. https://lnkd.in/eyn67ert

Climate Finance Recently, I came across the term "climate finance" and found myself deeply interested in understanding its significance. Climate finance refers to the funding allocated to support actions that mitigate and adapt to the effects of climate change. This includes investments in renewable energy, sustainable infrastructure, and projects aimed at reducing carbon emissions and building climate resilience. What I learned is that climate finance is not just about large-scale projects but also encompasses support for local communities and vulnerable populations who are most affected by climate change. It plays a crucial role in achieving international climate goals, such as those outlined in the Paris Agreement, by ensuring that financial resources are available to reduce greenhouse gas emissions and adapt to changing environmental conditions. Key insights I gathered include: ❄️Mitigation and Adaptation: Climate finance helps fund efforts to reduce emissions (mitigation) and to adapt to the changing climate (adaptation). This dual approach is vital for a sustainable future. ❄️Global Collaboration: Effective climate finance involves collaboration between governments, private sector investors, and international organizations to mobilize the necessary funds. ❄️Innovative Financing: There are various innovative financial instruments, such as green bonds and carbon credits, that are used to support climate-related projects. ❄️Economic Growth: Investing in climate finance can drive sustainable economic growth by creating green jobs and fostering new industries centered around clean energy and sustainability. ❄️Discovering more about climate finance has been eye-opening, highlighting the critical intersection between finance and environmental sustainability. It's a powerful reminder that addressing climate change requires not only technological innovation but also strategic financial investment. Learn more about the importance and impact of climate finance: UNFCCC - Climate Finance. #ClimateFinance #Sustainability #RenewableEnergy #ClimateChange #GreenInvestment #EnvironmentalImpact #LearnAndGrow

It's encouraging to see my work in sustainable finance/ climate finance/ESG (Environmental, Social, and Governance) being recognized and valued by scholars, media outlets, practitioners, and policymakers. Such acknowledgment fuels my motivation to continue producing impactful research. Recently, my paper on green bonds, co-authored with Shiva Rajgopal, was discussed in a Bloomberg article, which is a testament to the relevance and influence of our work in the field. https://lnkd.in/d3gGU7rm SEC Commissioner's Speech : https://lnkd.in/evJxnKkm Furthermore, the research I conducted with Shiva Rajgopal and Aneesh Raghunandan on carbon emissions has been spotlighted in the SEC's new Carbon Disclosure Rule. Our study emphasizes the significance of carbon intensity (as opposed to the level of emissions) and highlights the issues associated with the discrepancy between disclosed and vendor-estimated carbon emissions data. https://lnkd.in/dZ5P9kG5 I also extend my heartfelt congratulations to all fellow researchers whose work has been highlighted by the SEC in their new Carbon Disclosure Rule.

Climate finance refers to investments in projects and initiatives promoting climate change mitigation, adaptation to climate impacts, and transitioning to a low-carbon economy. These investments can come from various sources, including governments, international financial institutions, private companies, and individual investors. The importance of climate finance lies in its potential to catalyze significant and sustainable change. First, climate finance can accelerate developing and adopting clean and sustainable technologies. These can include renewable energy projects, such as solar and wind power, or innovative solutions for reducing emissions in industry and transport. By making these technologies more accessible and cost-effective, climate finance can contribute to reducing greenhouse gas emissions and mitigating climate change. Second, climate finance can play a crucial role in helping communities prepare and adapt to the inevitable impacts of climate change. This can include natural disaster resilient infrastructure projects, such as flood defense systems or water management strategies. Investing in these solutions can reduce the vulnerability of communities most affected by extreme weather events and protect people's livelihoods. Moreover, climate finance holds the potential to catalyze a shift in economies towards more sustainable and equitable models. This can be achieved by directing resources towards projects that stimulate the creation of green jobs and the reduction of socioeconomic disparities. In addition, climate finance can drive responsible business conduct and transparency in utilizing natural resources. However, despite recognizing climate finance's importance, significant challenges remain. These include the need to substantially increase the amount of investment available and ensure that such investments are directed towards truly sustainable projects tailored to the needs of local communities. Promoting international collaboration and policy coherence is also essential to maximizing the impact of climate finance. In conclusion, climate finance is vital for tackling the climate crisis and building a more sustainable and equitable future for all. Governments, financial institutions, companies, and individuals are critical players. The commitment to mobilizing and using significant resources effectively and efficiently is imperative to address this urgent challenge. Only through collective and coordinated efforts can we hope to achieve the mitigation and adaptation goals necessary to protect our planet and future generations. #Climatefinance #CO2offset #consulting #betterfuture #carboncredit