New initiative will provide governance, increase the supply of credible projects, and facilitate the creation of standardized financial contracts to incentivize market participation.
Sharm El-Sheikh, Egypt – Today at COP27, Three Cairns Group and Bloomberg Philanthropies announced a new initiative to form the Global Carbon Trust (GCT), and the Carbon Storage Governing Council (Governing Council). These organizations will drive innovation and transparency and help scale the voluntary carbon markets (VCM).
Voluntary carbon markets need to grow by more than 15-fold by 2030 in order to support the investment required to deliver a 1.5-degree pathway.(1) While significant progress has been made in advancing governing principles, scientific standards, and quality specifications, the VCM currently lacks the crucial infrastructure which underpins traditional financial markets, such as standardized, incentive-based contracts.
The GCT will be designed to supplement the existing carbon markets by offering an effective way to manage the supply and liquidity of high-quality carbon credits. Today, potential buyers of carbon credits are deterred by the current lack of standardized contracts, the inability to depend on the long-term performance of carbon removal and storage projects, and the absence of well-capitalized intermediaries between buyers and sellers. At the same time, friction in carbon credit certification limits the innovations in technology and methodology needed to enable sellers to bring supplies of high-quality carbon credits to market.
The Governing Council will work with the Global Carbon Trust (GCT). The Governing Council will include representatives from civil society, academia, and leading subject matter experts. In carbon markets, society has the greatest vested interest—not an individual buyer or seller. The emphasis of the Governing Council will be on ensuring society’s interests are served.
- The GCT will address the need for term-limited, fungible carbon credits backed by enforceable contracts to price in the urgency of taking climate action and align financial incentives with climate goals.
- The GCT will create standardized contracts for carbon credits, embed third party monitoring and verification of project performance, and provide arbitration and compensation processes for projects that fail to meet targets.
- The GCT will increase supply—including from emerging economies—by lowering barriers to entry, stimulating innovation in carbon removal and storage technology, and increasing the capacity for long-term carbon removal.
Through the establishment of working groups, the initial focus of the GCT is expected to be on developing fixed-term contracts, the structuring of carbon credit projects, the sale of fungible credits into standardized contracts, establishing monitoring and verification audits of carbon storage for carbon credits, and developing a systematic arbitration process for credits that fail after purchase. The GCT will also build on key elements of the VCM, including increasing revenue generated by carbon storage that can help fund projects with other benefits. Along with the GCT, social and civil society institutions, independent registries and verifiers, brokers, and exchanges will all continue to play unique and vital roles in the functioning of voluntary carbon markets.
Through these efforts, the GCT will serve as a source for transparent carbon market data, enabling market participants and regulatory bodies to safeguard climate impacts, reduce greenwashing, mitigate investment risks, and improve the credibility of the overall market.
Three Cairns Group and Bloomberg Philanthropies look forward to engaging with a wide variety of parties throughout the process of establishing the GCT and the Governing Council.
Mark Gallogly, Co-founder, Three Cairns Group, said:
“The climate crisis requires urgent and dramatic carbon emissions reductions. To reach its potential, the VCM will need greater rigor, data, transparency, ongoing measurement, and capital. The GCT’s mission is to augment and improve existing carbon markets and enable the VCM to scale to its needed size.”
Michael R. Bloomberg, Founder, Bloomberg LP and Bloomberg Philanthropies, said:
“A credible and efficient market for carbon offsets would be a powerful way to drive more capital to projects that cut emissions or prevent them from happening, and an important tool in the global fight against climate change. Turning climate commitments into smart investments that make a real difference requires transparency, accountability, and reliable data, all of which the Global Carbon Trust will help bring to carbon markets.”
Karen Fang, Global Head of Sustainable Finance at Bank of America, said:
“Bank of America is helping develop a transparent, liquid, and scalable voluntary carbon offset market leveraging our strong carbon credit trading and financing capabilities. Driving consensus on the market structure is essential to building a standardized framework that allows the voluntary carbon markets to grow into a practical and essential climate change solution while industry sector-specific decarbonization technologies mature and scale up.”
Marc Benioff, Co-CEO Salesforce and Co-Chair TIME, said:
“This is a moment of urgency—we’re facing a planetary emergency. We need a new net zero economy that prioritizes reducing emissions, sequestering carbon, and energizing an ecopreneur revolution to ensure a more sustainable future. When done right, carbon credits can be a powerful solution for mitigating climate change and accelerating the transition to a net zero, nature-positive world. At Salesforce, we developed Net Zero Marketplace, a trusted platform that makes carbon credit purchases simple and transparent. We’re excited to work with GCT and the Governing Council on their efforts to provide more governance, management, and incentives for scaling the global supply and liquidity of high-quality carbon credits. We need everyone on board now.”
Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All, said:
“Voluntary carbon markets have the potential to grow 100x by 2050. GCT complements the newly launched African Carbon Market Initiative (ACMI) and supports bold and innovative financing mechanisms that will create green jobs and unlock much-needed climate finance. This is aligned with the recommendations of the United Nations Global Crisis Response Group report.”
Wale Shonibare, Director, Energy Financial Solutions, Policy & Regulations, Power, Energy, Climate & Green Growth Complex, African Development Bank, said:
“The African Development Bank is keen to collaborate with the Global Carbon Trust (GCT) to explore the potential for optimizing the workings of the Voluntary Carbon Markets, through improvements in regulation, certification, transparency, monitoring and standardization of financial contracts to boost the value of carbon credits realizable from carbon storage projects in Africa”
Angela Churie Kallhauge, Executive Vice President- Impact, Environmental Defense Fund, said:
“The Global Carbon Trust represents an innovative and much-needed approach to improving on the current carbon market to deliver high-quality carbon credits that represent permanent and additional emission reductions or removals. In so doing, it will put the voluntary carbon market on greater scale, higher quality, broader inclusion, and faster innovation”.
Ahmed M. Saeed, Vice President for East Asia, Southeast Asia and the Pacific, Asian Development Bank, said:
“The Asian Development Bank welcomes the initiative by Three Cairns Group, Bloomberg Philanthropies, and partners to establish the Global Carbon Trust. The world urgently needs high integrity, scalable carbon markets – both to accelerate the path to net zero and to ensure this process advances the cause of economic development. We will not achieve the Paris goals without the kind of collaborative, purposeful innovation that this effort represents.”
The Global Carbon Trust and the Carbon Storage Governing Council will commence work throughout the coming months, with further updates expected in 2023.
About Three Cairns Group:
Three Cairns Group is a mission-driven investment and philanthropic firm. We work to build and support innovative organizations, platforms, and initiatives to accelerate climate action. Our work is focused primarily on three strategies:
- Three Cairns Ventures: We deploy capital to accelerate the transition to a low-carbon economy. We make direct investments, support entrepreneurs, and are limited partners in climate-focused funds. Our capital has the flexibility to make long-term strategic investments.
- Three Cairns Philanthropies: Our philanthropic investments support a range of activities to reduce GHG emissions and advance a clean energy economy including policy advocacy, research, education, entrepreneurship, and climate justice. We strive to fill gaps, nurture talent, and catalyze change.
- Project incubation and execution: In select areas around climate and climate finance, we lead longer-term efforts that include research, idea generation, incubation of teams, strategic partnerships, and the creation of new organizations.
About Bloomberg Philanthropies:
Bloomberg Philanthropies invests in 941 cities and 173 countries around the world to ensure better, longer lives for the greatest number of people. The organization focuses on five key areas for creating lasting change: the Arts, Education, Environment, Government Innovation and Public Health. Bloomberg Philanthropies encompasses all of Michael R. Bloomberg’s giving, including his foundation, corporate, and personal philanthropy as well as Bloomberg Associates, a pro bono consultancy that works in cities around the world. In 2021, Bloomberg Philanthropies distributed $1.66 billion. For more information, please visit bloomberg.org or follow us on Facebook, Instagram, YouTube, Twitter, and LinkedIn.