AN ACT of Parliament to provide for a regulatory framework for enhanced response to climate change; to provide for mechanism and measures to achieve low carbon climate development, and for connected purposes

The recent launch of exchange-traded derivatives contracts in VCCs has galvanized focus on further developing VCC derivatives. Growth in the over-the-counter (OTC) derivatives market will be helped by greater overall familiarity with transactions in VCCs and related products.

This country-level Index is based on a detailed analysis of the climate policies, regulations and political risk in 20 countries hosting a total of 3,400 voluntary carbon projects and representing over 80% of all carbon credit issuances. 

This working paper presents positive trends and overarching gaps in how countries designing programs to reduce emissions from deforestation and forest degradation (REDD+) are proposing to address governance challenges. It can serve as a starting point to help governments, donors, and civil society groups identify where additional analysis, financial support, and capacity-building are needed to build effective REDD+ strategies, systems, and institutions.

The concept of REDD+ was included in UNFCCC negotiations for the first time in 2005 in COP 11. The experience with processes of payments linked to REDD+ results is still limited and heterogeneous. However, it is possible to extract key lessons from the existing initiatives. The benefits distributed through different REDD+ initiatives vary and have reached different stakeholders through different channels. Hence, the extent of uptake and the impacts of shared benefits in each case are also different.

The report includes a total of twelve recommendations relating to primary market functioning, transparency and predictability of primary market decisions; market structures for primary markets, covering allowance allocation mechanisms, market stability mechanisms and primary market access; and secondary market functioning, with particular focus on market integrity, transparency and structure.

Highlights:

This report includes three sections: Section A outlines the vision of Project Genesis 2.0, which discusses the green washing and additionality issues in the green bond market, proposes a new green bond structure appended with MOIs, and provides an overview of the benefits demonstrated in the project; Section B takes a deep dive into the two prototypes’ respective technology solutions, key learnings and future considerations. A sample term sheet template for issuers on the proposed green bond and MOI structure contributed by King & Wood Mallesons is attached as Annex.

The total investment will be approximately AUD 50 million in the initial phase, and the total estimated volume of carbon offset contribution to be generated through plantation activities will be around 4 million tCO2e, which will be further scaled up to over 10 million tCO2e depending on the market demand. Mitsui aims to combine this low carbon investment with its forestry expertise and contribute to achieving net zero emissions of Mitsui group and its business partners by 2050.

The transactions saw SCOA purchasing the first batch of carbon credits tokenized on the Chia blockchain, demonstrating the successful implementation of the Fund’s concept and vision, utilizing the Climate Action Data Trust (“CAD Trust”), a part of the World Bank’s effort through the Climate Warehouse to create an end-to-end digital carbon market infrastructure to increase transparency and quality of carbon credits.