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☁️ "Carbon Markets Demystified"

The Earthshot Podcast

Photo by Richard Gatley | Unsplash

Table of Contents

💸 Sponsored PodSnack by Earthshot Labs

Hosts: Patrick Leung & Armando Davila
Guest: Oliver Miltenberger | Consultant & Scholar
Category: ☁️ Carbon | Carbon Markets

Podcast’s Essential Bites:

[7:31] OM: "Everybody in the world is going to have to care about climate change pretty soon and one of the only universal mechanisms that everybody could swallow, including certain countries that don't like to ratify international agreements or treaties, [are] carbon markets. [...] We're all going to have to think about the way that we're impacting climate change, whether we're making a net better or net worse. And the way that we're measuring that in these markets is through carbon credits."

[11:46] OM: "The [carbon] marketplaces at their core are trying to internalize an externality, which is climate impact, and maybe rectify it through what ostensibly would be offset interventions. But if we can start doing that in this standalone arena called carbon markets, I think at some point economic decisions and policy decisions are just going to circumvent that external arena and say, we need to just fundamentally act differently and in everything that we do, we need to price carbon. And we need to price our impact on the environment. And we need to weigh the costs and benefits of damaging our ecosystems, and also the costs and benefits of not restoring ecosystems. These marketplaces are the place to innovate and the place to draw in imperative and attention. But there's a broader goal beyond it."

[24:03] OM: "When we talk about a carbon project, especially in nature-based solutions, the carbon impact is almost secondary. It's sort of incidental to the intervention. The intervention itself is about livelihoods in a lot of times, or business as usual activities, or addressing issues of poverty, or sometimes violence, or external forces from countries that are super far flung from the activities that are currently happening. [...] It's really about changing our system and carbon markets are just a microcosm."

[27:20] OM: "The cost of [carbon] does need to go up, but only so that decisions are made differently, not necessarily so that money exchanges hands based on the price. [...] If we do this right, we start to internalize these prices. Right now [...] some oil majors or mining majors would come in and say, if we look at our portfolio of activities and we try to price carbon internally, it's going to be a much higher price than we would have to [...] pay for a carbon credit. So their strategy right now is, rather than change the way we're operating internally, because it would cost more, we're going to go out and purchase credits."

[28:22] OM: "There needs to be more tools to better and more accurately price carbon. [...] The SEC proposed [...] [that] in your reporting, you need to have some justifiable number in terms of a price of carbon for your operations. And if you want to use offsetting, you need to have multiple, different scenarios for what your internal cost of carbon is. And then you need to match it to offsets and the offsets you need to pay within a certain range of price that's similar to your internal pricing. [...] The very next line of the SEC recommendation is, we realize, essentially nobody can do this. It's just out of our capacity. Which is [...] where we get back to this opportunity for carbon markets to be an innovation sandbox to say, what are the tech and tools that we need to start to be able to understand this better. That I think does start to shift systems."

[37:50] OM: "It's another thing to recognize that we talk about permanence as if we're locking up carbon in a box and sticking it into a tree. It's a cycle. That tree is gonna fall over maybe before 100 years from now. And it's gonna fall into the ground, and some of it's gonna get released in the atmosphere, some of it's gonna go down into the soil, some of it might get moved to an entirely different destination if it's harvested or carried away in some sort of a flood event or in a storm. [...] To talk about permanence as if it's a static and not a dynamic concept it's convenient when you need to write rules for a methodology, but it's not really realistic."

[57:30] OM: "I think that [the 21st century] Earthshot idea is realizing that we are not abstracted from nature and we are truly part of it. And we need to act like it. [...] Look what happens to the climate, look at what happens to everything in the world when, on average, it gets a little bit hotter. That's the smallest of increments, and suddenly we [face] food insecurity, national refugee crises, biodiversity, [...] pollution and cancer and risks of fires burning down your house and floods overtaking the coastlines. [...] What changed in terms of having that first environmental revolution [in the 70s] were people. [...] There was a cultural shift. That's what we need here. I think that's our Earthshot."

Rating: ☁️☁️☁️☁️

🎙️ Apple | Spotify | Google
🗓️ 10/05/2022
✅ Time saved: 58 min