Welcoming the announcement today by the UK Chancellor of the new UK working group on voluntary carbon markets, led by Dame Clara Furse, Lord Stern of Brentford, the Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, said: “Carbon markets have an important role to play as part of the plans and strategies that businesses are devising for cutting their emissions to net-zero levels. All businesses should be developing an ambitious and credible pathway to net-zero emissions, seeking to reduce emissions strongly across their activities, including in their supply chains. Achieving net-zero emissions means reducing emissions as much as possible and offsetting any residual emissions by equivalent removals of greenhouse gases from the atmosphere. These ‘negative emissions’ can be generated, for instance, by planting trees and other vegetation or direct air capture and storage of carbon dioxide.”

“On the way to taking their emissions to net-zero, firms should first and foremost cut their output of greenhouse gases strongly, but along the route, they should also invest in emissions reductions by others, particularly in poor countries. These avoided emissions are not the same as negative emissions, but have a role to play in tackling climate change because it is the accumulation of stocks of emissions in the atmosphere, rather than the flows in any particular year, that is driving climate change.”

“In order for voluntary carbon markets to be credible and command support, the offsets must be high-quality in the sense that they should be clearly fostering investments in creating action that would not otherwise have occurred. To be high-quality, they should also take into account the overall impact, particularly on economic development, biodiversity and resilience. I am sure that Dame Clara Furse will ensure that these issues are at the forefront as the market develops, recognising the importance of creating markets that are not just credible in terms of the financial sector, but also in terms of global efforts to implement the Paris Agreement and stop climate change. A well-designed, high-quality and credible carbon market can achieve both. This is an important and valuable initiative.”

Lord Stern also strongly welcomed the decision to update the remit of the Monetary Policy Committee to reflect the government’s economic strategy for achieving strong, sustainable and balanced growth that is also environmentally sustainable and consistent with the transition to a net-zero economy: “This is an important change that further aligns monetary policy with the ambition for sustainable, inclusive and resilient economic growth. This recognises that the goal of reaching net-zero emissions by 2050 is consistent, rather than in competition, with having a robust, stable, and thriving economy. Indeed, the innovation and investment involved in the transition can drive towards a much healthier, more resilient, and more attractive path of growth and development than we have seen in the past, whilst reducing the immense risks of climate change.  It will also enable the Bank of England to increase still further its support for tackling climate change.”

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