European Capacity Building Initiative

Two New OCP/ecbi Publications on Innovative Climate Finance

Discussion Note on Operationalizing the VCM-iSOP

This Discussion Note, by ecbi Director Benito Müller, explains how an international Share of Proceeds (iSOP) for the Voluntary Carbon Market (VCM) could be operationalised to shore up the systemic social integrity of the VCM. It concludes that the VCM system regulators should collaborate in establishing the rules for a systemic (‘mandatory’) VCM iSOP (as part of the ICVCM Core Carbon Principles and the VCMI’s Claims Code of Practice), preferably collected from credit users at the point of credit retirement. While this is likely to require the establishment of some compliance tool, it is preferable to a collection from project developers who are currently bearing most of the costs for shoring up the VCM’s systemic integrity.

An iSOP enhances the value of the environmental and social benefit that a carbon credit user can claim upon retirement of a carbon credit. It ensures that the use of carbon credits is further aligned with the Paris Agreement. A generally levied (non-optional) iSOP does not only increase the social value of an individual claim, but it also crucially adds overall integrity and value to the VCM, to all VCM transactions.


Blog Post on the Proposal for a Climate Solidarity Alliance: Possible Next Steps

A recent OCP blog post proposed a Climate Solidarity Alliance (CSA), which would establish an alliance of (national and sub-national) actors that are able and willing to introduce a Climate Solidarity Levy (CSL) earmarked as an innovative source of funding for responding to loss and damage from adverse climate impacts, particularly through the new multilateral Loss & Damage Fund (L&DF).

The proposal envisages several possible CSLs, collected at the national or sub-national level, which are: (i) easily collectable; and (ii) earmarked for loss and damage. The paradigm example is an air ticket charge, akin to the French solidarity tax on airplane tickets of 2006. It is envisaged that the CSLs be used both domestically and to contribute to the L&DF, according to distribution formula (to be among between CSA members), which could set limits on domestic use and introduce an L&DF solidarity pay-back multiplier for certain contributors.

Our approach to establishing a CSA is to complement other initiatives that are exploring potential innovative global sources (taxes/levies) such as the new global taxation taskforce for climate action and sustainable development, launched at COP 28 and co-chaired by Barbados, France, and Kenya, by acting now, voluntarily, and without the need of a multilateral agreement.

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