World Bank President David Malpass speaks at the World Bank's annual meeting on October 11, 2022, at the World Bank headquarters in Washington, DC. JIM WATSON AFP LONDON - The World Bank and partners including Singapore launched a global tracking system to clean up the opaque market for carbon credits and help developing countries raise much-needed climate finance quickly and more cheaply.
Carbon credits generated through activities like planting forests or pulling carbon dioxide from the air are sold to polluters to offset their emissions as a way of helping them reach net-zero emissions to limit global warming.
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While governments wrangle over the rules for trading so-called compliance credits, projects are being launched to generate new credits and countries are setting up registers to track them.
Private sector efforts have sprung up by offering credits for voluntary carbon markets, while a range of registries such as Verra and Gold Standard are accrediting and tracking them.
The voluntary market for $2 billion has remained small. Critics cite poor market transparency, limited credits and questions about the quality of projects.
The Climate Action Data Trust CAD Trust - a new database aims to address these issues by collating all the project and carbon credit data in one place and making it free for the public.
Chandra Shekhar Sinha, an adviser for the Climate Change Group at the World Bank, said that the goal was to create a data layer that allows people to get a better sense of what's happening across the world, across different jurisdictions, across different programmes.
We're able to track it, avoid double-counting and figure out what are the innovations taking place, and hopefully create a race to the top at the same time as lowering barriers to entry for market participants.
The CAD Trust, co-founded with the International Emissions Trading Association IETA, will provide a platform listing various existing carbon offset registries to make it easier for companies and countries to share data.
Sonam Tashi, chief planning office at Bhutan's Ministry of Economic Affairs, told Reuters the new CAD Trust portal would allow the country to save around $1 million in initial costs for accessing the market, compared to the costs of setting up its own systems.
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It really helps us leapfrog the whole learning process. He said that it brings us up to speed with what is required within the carbon markets.
He said Bhutan is talking to potential buyers who want to know how carbon credits are being registered, verified and monitored.
The World Bank facility will help us, Tashi said. The CAD Trust meets all the technical requirements of host countries and buyers. He said that using the CAD Trust means that Bhutan would likely be able to start selling credits in 2023 - a year earlier than if the country had not been able to access the facility.