As prepared for delivery.
Good morning, everyone. I am honored to join you today for this critical discussion on accelerating climate action through high-integrity carbon markets.
Let me express my appreciation to our hosts, Annette, Chris, and Rachel, for their leadership in the carbon market ecosystem, as well as Bloomberg Philanthropies and GFANZ for their continued support in this space.
I don’t need to remind any of you about the record-breaking temperatures, deadly heatwaves, droughts experienced by people all over the world. We can now reliably talk about the earth warming to record temperatures, every year. We all know there is an urgency to act.
We can leave no stone unturned in the search for more financing and greater impact on climate.
While the climate crisis is escalating, there are solutions are out there, including investments, policies and development pathways that can make a significant difference.
Carbon markets – both compliance and voluntary – are an important part of the solution.
As we are seeing this week in New York, with several events devoted to carbon markets and carbon pricing, these approaches are taking an increasingly prominent role in discussions on how to tackle the warming of the planet, and how to raise much-needed finance to pay for climate action.
Carbon pricing and carbon markets offer a powerful solution that combine cutting global emissions, creating jobs, providing affordable clean energy, and protecting natural landscapes.
Together, they incentivize emissions reductions while channeling much-needed capital into critical investments and transition projects.
But while they offer real potential, carbon markets, have suffered a lot of setbacks.
I’m sure no one in this room today is surprised that there is some confusion, lack of clear signals, lack of enforcement, and markets are responding accordingly.
So we need to work to establish better regulation, stronger validation and consistent standards.
How can we get to a more ambitious framework that ensures much more money coming from these markets? We know that this isn’t easy, we also know success is not guaranteed.
But at the World Bank, we recognize the potential of carbon markets – if done right.
The World Bank has been at the forefront of advancing carbon markets for over two decades:
- We’ve supported more than 30 countries in establishing the country frameworks to operate carbon pricing and carbon market mechanisms through our Partnership for Market Implementation.
- We’re also helping countries to design and implement large scale programs that generate high integrity carbon credits in the forests and other sectors.
- For instance, our new ASCENT program aims to bring electricity to 100 million people in Africa, leveraging $5 billion in financing from the Bank and an additional $10 billion from other sources, including through carbon markets.
With MIGA and IFC, we’re also developing and piloting innovative financial products and de-risking instruments to attract private capital for carbon markets.
But for countries to fully to unlock the financing flows and promises of high integrity carbon markets, it is essential to address the key bottlenecks holding them back and build a sound, well-functioning and trusted global carbon market.
Our recently published State and Trends of International Carbon Markets 2024 report identifies key bottlenecks that need to be addressed to unleash the full potential of these markets.
Trust is essential—trust in the environmental integrity of credits, trust that emissions reductions will be rewarded, and trust in a sound regulatory framework.
- Part of rebuilding that trust, is to elevate the voices of all people involved - including indigenous peoples and local communities - in shaping these markets.
- These groups are not only crucial stakeholders but are often the stewards of the natural landscapes we seek to protect.
- They should be central to all planning and decision-making – from deciding how best to undertake the climate work, to how to reinvest carbon revenue.
Our Carbon Markets Engagement Roadmap, launched at COP28, is a key initiative to partner with stakeholders and ramp up efforts to shape a sound, well-functioning and trusted global carbon market.
We have convened a working group with many organizations represented here – main integrity initiatives, independent standards, project developers, raters, regulators, and policymakers – to collaboratively address key barriers and provide countries with a comprehensive blueprint.
- This blueprint will help countries establish the necessary foundations for high-integrity carbon markets–with robust policy frameworks, strong financial and market integrity, safe and efficient market infrastructure.
These foundations are critical to ensuring that carbon markets—both compliance and voluntary carbon markets— are anchored in local contexts and aligned with a common international framework that ensures environmental, financial, and social integrity.
- This is the key point of GFANZ’s framework which was presented as part of a high-level roundtable yesterday.
- Echoing President Banga’s remarks yesterday, GFANZ’s approach is a positive step in connecting carbon markets and aligns with our own ongoing efforts.
While we’ve made significant progress, the real impact of our collective work will only be seen when effectively rolled out in countries: this is when we will hear fewer issues, see more successes, and achieve greater scale.
A few weeks ago, we gathered government representatives and key leaders in the carbon market ecosystem at our Innovate4Climate Conference in Berlin to discuss how to achieve successful implementation. There, we coalesced around three key points.
- First, carbon markets don’t need to be perfect to deliver results. Thoughtful risk-taking and bold pilots are essential to jumpstart the market.
- Second, for VCMs there is uncertainty around the legitimate use of carbon credits and potential reputational risks for demand-side users. Achieving broader stakeholder convergence on the use case by corporates could unlock significant market growth and value.
- Finally, the alignment of compliance and voluntary carbon markets would unlock significant benefits and drive demand.
These actions are essential to scaling high-integrity carbon markets, but their success will depend on strong coordination across integrity initiatives, governments, the private sector, and civil society.
Ministries of Finance, in particular, also have an integral role in driving carbon market development, and platforms like the Coalition of Finance Ministers can help advance the carbon market narrative and coordinate country-owned blueprints.
Let today’s event be a call to action for all of us. High-integrity carbon markets are within our reach, but only if we work together to ensure delivery and momentum beyond COP29.
Thank you.
