This moment between a Commonwealth budget and a Federal election in which one of the important drivers is government policy on climate change, is an interesting occasion to reflect on the value placed on the integrity of the emerging carbon market. The dynamics of this market globally evidence the demand for principles-based good practice both inside and beyond the requirements of legislation, corporate governance and voluntary agreements. Emerging markets by definition have particular characteristics that make integrity a special concern.
The market for carbon credits in Australia has to date been dominated by the lowest cost driver of the ERF. At a subnational level, the Queensland Government’s nation-leading initiative, the Land Restoration Fund (LRF) is about switching that lowest cost driver out for a model which places a premium on the environmental, economic and social co-benefits delivered through carbon farming. These benefits are inextricably bound up in the changed management practices required to deliver carbon sequestration through methodologies particularly suited to Queensland’s unique landscape and its environmental drivers: protecting the reef through decreasing sediment run-off and improved water quality, increasing biodiversity, restoring threatened species habitats. The LRF is interested too in fostering economic resilience and diversity, alongside cultural and social strength through the investments it makes.
‘Integrity’ and ‘emerging markets’ are concepts most often linked in discussions about investment opportunities and risks in recently developed or developing countries. But for the trade in carbon emissions units we are talking about integrity across the global market. Integrity goes to certainty about the comparability, the quality and volume of units of supply, about the provenance and verification of the offerings, about various elements across the supply chain from landholders and interest holders’ consent to avoiding perverse environmental, social or economic outcomes for both participants and local communities. Before we even get to stability and reliability of trading platforms there is already a plethora of potential concerns, some of which may be the subject of legislation and some of which are about ethics, values, accountability and transparency. From this perspective Queensland sees the significance of the CMI’s Code of Conduct launched in June 2018 and its signal to the market that these matters are being given appropriate attention.
What are investors looking for? What reassurance can or should producers and traders provide? What will be the shape of a global low-carbon economy and what will be the role of large emitters, who are significant players in this global trade, in shaping this transition. You see how this shape of this discussion quickly assumes circularity. Market stability, producer and investor interest in verifiable standards and methods, increased visibility and disclosure about pricing assumptions and triggers, straightforward legislation within stable policy frameworks with broad-based non-partisan support, all contribute to creating markets where trust, accountability and transparency are strong characteristics.
This is the kind of marketplace that the Queensland Government’s Land Restoration Fund is both wanting to contribute to and is interested in participating in at a local, national and global level. The Queensland Government, and particularly the Department of Environment & Science team will have a presence at the Summit, and look forward to engaging with you all on the above topics throughout the official and unofficial programs, and networking breaks.