US Special Presidential Envoy for Climate John Kerry, the Bezos Earth Fund, and The Rockefeller Foundation announced a process to design an Energy Transition Accelerator (ETA) with the potential to catalyze private capital for the clean energy transition in emerging and developing economies.
The three partners were joined at the announcement in the US pavilion at COP27 by SEforALL, EDF, PepsiCo, Microsoft, and Nigeria. Others including RMI, C2ES, CPI, Global Optimism, and Chile offered support.
According to the IEA, the world needs $4.2 trillion dollars in clean energy investment, half of which is required in developing and emerging economies. The process aims to design a new type of high-quality carbon credit framed by robust guardrails to channel much needed private sector investment to phase out fossil fuels and accelerate renewable energy.
“If we’re going to phase out fossil fuels in our energy systems, we believe voluntary carbon markets have a role to play,” said Andrew Steer, President of the Bezos Earth Fund, in a press release. “They must have high standards on both the supply side and demand side with appropriate environmental and social safeguards. The purpose of the proposed scheme is precisely to design and agree to such standards, then to move to implementation. The need is urgent, and we must bring people together to move the needle forward.”
Burning fossil fuels for power generation in emerging and developing economies accounted for 9.8 billion tons of CO2 emissions in 2020, double the annual emissions of the United States. Without sufficient investment to reduce these emissions, it will be impossible to prevent the worst of the climate crisis. A just energy transition offers the opportunity to connect billions of people to reliable, renewable electricity, many for the first time.
Over the next year, the Bezos Earth Fund, The Rockefeller Foundation, and the US State Department will engage with developing countries, political and thought leaders, climate champions, and the world’s foremost experts to design the ETA. The Science Based Targets Initiative (SBTi), the Voluntary Carbon Markets Initiative (VCMI), the Integrity Council for the Voluntary Carbon Market (ICVCM), and WRI for the Greenhouse Gas Protocol will be consulted to ensure broad alignment with best practice environmental and carbon market standards.
The intent is to gather input and expertise from the people and institutions with the know-how and networks to design an ETA that produces verified greenhouse gas emission reductions which participating jurisdictions will have the option of issuing as marketable carbon credits. The credits could then be purchased by companies, including through advanced purchase agreements, which would create a predictable finance stream to de-risk and leverage other forms of finance. The process will focus on a methodology designed to operate at a broad or jurisdictional scale while steering carbon finance to discrete projects. Five percent of the value of all credits generated through the ETA will be dedicated to international support for adaptation.
Over the next year, the Bezos Earth Fund, The Rockefeller Foundation, the US State Department, and others will seek to address a number of tough issues, including:
- A methodology which contains rigorous protocols for crediting and for monitoring, reporting, and verification so that any carbon credits generated are real, additional, and permanent.
- Rules and safeguards, which ensure that the use of carbon credits by companies is consistent with a science-aligned net zero pathway. Participating companies will need to achieve deep reductions in their own value chain emissions, with emission reductions generated through the ETA supplementing their internal abatement.
- Parameters that maintain integrity while ensuring sufficient supply (i.e. developing country participation) and demand (i.e. company participation).
- Guidance for social safeguards, benefit-sharing arrangements and support for job creation and training in participating jurisdictions.
- Stringent end-to-end transparency guidelines.
Any revenue eventually raised through the ETA would supplement other sources of finance being mobilized by governments, donors, and multilateral and private financial institutions in support of developing countries’ energy transition.
The Bezos Earth Fund and The Rockefeller Foundation will support the necessary logistical and expert support for the design of the ETA. Additional details will be released over the coming months, as the partners seek to finalize the standards.