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| {{More citations needed|date=December 2021}}}} | {{More citations needed|date=December 2021}}}} | ||
| '''Carbon retirement''' is a mechanism within ] schemes to mitigate ] by permanently removing emission allowances from circulation. | |||
| Carbon retirement refers to the process of permanently canceling carbon credits or emissions allowances, ensuring they cannot be traded or used for offsetting purposes. This approach is critical in ensuring the environmental integrity of carbon markets and contributes directly to climate change mitigation. Carbon retirement is used in both compliance-driven and voluntary carbon markets, where entities choose to retire credits to demonstrate their commitment to sustainability goals<ref>{{Cite web |title=EU Emissions Trading System (EU ETS) - European Commission |url=https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en |access-date=2024-12-06 |website=climate.ec.europa.eu |language=en}}</ref><ref name=":0">{{Cite web |title=Our Sustainability Journey {{!}} Microsoft CSR |url=https://www.microsoft.com/en-us/corporate-responsibility/sustainability-journey |access-date=2024-12-06 |website=Microsoft |language=en-US}}</ref><ref name=":1">{{Cite web |date=2024-09-24 |title=On Carbon Credits, Tell the Whole Story {{!}} Opinion: On carbon credits, tell the whole story - Verra CEO |url=https://verra.org/verra-views/on-carbon-credits-tell-the-whole-story/ |access-date=2024-12-06 |website=Verra |language=en-US}}</ref> | |||
| In the ], EU Emission Allowances permit holders to emit a specified amount of carbon dioxide. If allowances are removed through carbon retirement, this increases the scarcity and cost of allowances, contributing to the overall reduction of ]. | |||
| ---- | |||
| === Historical Context === | |||
| Additionally, carbon retirement encompasses the purchase and permanent retirement of ], certificates representing the prevention of ] emissions or removing these gases from the atmosphere. Companies often use these credits to offset emissions from operations that are challenging to eliminate immediately, thus contributing to their environmental responsibility efforts. Companies could potentially claim "retired" emission allowances as their own carbon credits, as compensation for emissions from sources that will eventually be eliminated. | |||
| The roots of carbon retirement lie in the development of carbon markets under international climate agreements like the '''Kyoto Protocol (1997)''' and the '''Paris Agreement (2015)'''. These frameworks introduced mechanisms such as the Clean Development Mechanism (CDM) and cap-and-trade systems. These markets allowed entities to buy and sell emissions credits to meet reduction targets. | |||
| Over time, concerns about the oversupply of allowances, low-quality offsets, and market manipulation led to calls for stricter measures. Initiatives like the Verified Carbon Standard (VCS) and Gold Standard emerged to ensure accountability and promote the voluntary retirement of credits to strengthen market credibility.<ref name=":2">{{Cite web |date=2024-09-24 |title=On Carbon Credits, Tell the Whole Story {{!}} Opinion: On carbon credits, tell the whole story - Verra CEO |url=https://verra.org/verra-views/on-carbon-credits-tell-the-whole-story/ |access-date=2024-12-06 |website=Verra |language=en-US}}</ref><ref name=":3">{{Cite web |title=Mobilizing Voluntary Carbon Markets to Drive Climate Action Recommendations |url=https://www.goldstandard.org/publications/mobilizing-voluntary-carbon-markets-to-drive-climate |access-date=2024-12-06 |website=Gold Standard |language=en}}</ref><ref name=":4">{{Cite web |date=2024-05-28 |title=US Principles for High Integrity Carbon Markets Could Drive Private Sector Climate Action |url=https://www.edf.org/media/us-principles-high-integrity-carbon-markets-could-drive-private-sector-climate-action |access-date=2024-12-06 |website=www.edf.org |language=en}}</ref> | |||
| Carbon retirement has been described as "straightforward and transparent," compared to other ] which can involve more complex methodologies and trading.<ref>{{cite journal |last1=Rousse |first1=Olivier |date=January 2008 |title=Environmental and economic benefits resulting from citizens' participation in CO2 emissions trading: An efficient alternative solution to the voluntary compensation of CO2 emissions |url=https://doi.org/10.1016/j.enpol.2007.09.019 |journal=Energy Policy |volume=36 |issue=1 |pages=388–397 |bibcode=2008EnPol..36..388R |doi=10.1016/j.enpol.2007.09.019}}</ref> | |||
| ---- | |||
| === Mechanisms of Carbon Retirement === | |||
| == Use == | |||
| 2020: McKinsey Sustainability reported a significant uptick in the retirement of carbon credits, with approximately 95 million tons of CO2 equivalent (MtCO2e) retired in 2020 alone, more than doubling the figures from 2017.<ref>{{Cite web |title=Carbon credits: Scaling voluntary markets {{!}} McKinsey |url=https://www.mckinsey.com/capabilities/sustainability/our-insights/a-blueprint-for-scaling-voluntary-carbon-markets-to-meet-the-climate-challenge |access-date=2024-02-21 |website=www.mckinsey.com}}</ref> | |||
| ==== 1. Voluntary Retirement ==== | |||
| 2022: British media outlet Carbon Brief observed that 146 million carbon credits were retired from the four largest registries for carbon-offset projects in the voluntary market, indicating a substantial increase in the volume of retired credits within just three years.<ref>{{Cite web |last=Pearson |first=Josh Gabbatiss, Tom |date=2023-09-28 |title=Analysis: How some of the world's largest companies rely on carbon offsets to 'reach net-zero' |url=https://interactive.carbonbrief.org/carbon-offsets-2023/companies.html |access-date=2024-02-21 |website=Carbon Brief |language=en}}</ref> | |||
| Voluntary retirement occurs when companies or individuals purchase and retire carbon credits, ensuring that these credits are permanently removed from the market. | |||
| * ''Example:'' Microsoft and Google have integrated voluntary carbon retirement into their sustainability strategies as part of their carbon neutrality goals.<ref name=":0" /><ref name=":5">{{Cite web |date=2020-09-14 |title=Our third decade of climate action: Realizing a carbon-free future |url=https://blog.google/outreach-initiatives/sustainability/our-third-decade-climate-action-realizing-carbon-free-future/ |access-date=2024-12-06 |website=Google |language=en-us}}</ref> | |||
| ⚫ | ==References== | ||
| ==== 2. Mandatory Retirement ==== | |||
| Mandatory retirement is implemented in regulatory systems like the '''European Union Emissions Trading System (EU ETS)''', where surplus credits are systematically retired to maintain market integrity and environmental effectivenes.<ref name=":1" /><ref name=":3" /> | |||
| ==== 3. Offset Retirement Registries ==== | |||
| Offset retirement registries, such as Verra and Gold Standard, ensure transparency and traceability by documenting every step of a credit’s lifecycle, including its eventual retirement.<ref name=":2" /><ref name=":4" /> | |||
| ---- | |||
| === Importance of Carbon Retirement === | |||
| ==== '''1. Environmental Integrity''' ==== | |||
| By retiring credits, emissions reductions become permanent, and the potential for double-counting or fraud is mitigated.<ref name=":4" /><ref name=":6">{{Cite web |title=Transparency, liquidity and integrity in the voluntary carbon market |url=https://www.environmental-finance.com/content/analysis/transparency-liquidity-and-integrity-in-the-voluntary-carbon-market.html |access-date=2024-12-06 |website=Environmental Finance |language=en}}</ref> | |||
| '''2. Market Stability''' | |||
| Retirement helps reduce the oversupply of credits in compliance and voluntary markets, ensuring higher credit prices and incentivizing investment in emissions reduction projects.<ref name=":1" /><ref name=":7">{{Cite web |title=Initiatives - IETA |url=https://www.ieta.org/initiatives/#carbon |access-date=2024-12-06 |website=www.ieta.org |language=en-GB}}</ref> | |||
| '''3. Public Trust''' | |||
| Organizations engaging in carbon retirement demonstrate accountability and build trust among stakeholders, including consumers, investors, and regulators.<ref name=":0" /><ref name=":5" /><ref name=":7" /> | |||
| ---- | |||
| === Challenges === | |||
| ==== 1. Verification and Quality Assurance ==== | |||
| Ensuring that retired credits represent real, measurable emissions reductions remains a challenge. Poorly validated projects or fraudulent practices undermine market confidence.<ref name=":4" /><ref name=":6" /> | |||
| ==== 2. Economic Impact ==== | |||
| The cost of retiring credits can discourage participation by smaller businesses and developing countries reliant on low-cost compliance measures.<ref name=":3" /><ref name=":7" /> | |||
| ==== 3. Equity Issues ==== | |||
| Many offset projects are located in developing nations, while the benefits of retirement often accrue to entities in developed countries. This raises concerns about the equitable distribution of climate benefits.<ref name=":2" /><ref name=":8">{{Cite journal |last=Cogswell |first=Nathan |last2=Warszawski |first2=Nate |date=2022-03-14 |title=5 Challenges the UNFCCC Must Overcome To Spur Climate Action |url=https://www.wri.org/insights/5-challenges-unfccc-must-overcome-climate-action |language=en}}</ref> | |||
| ---- | |||
| === Innovations in Carbon Retirement === | |||
| # '''Blockchain Technology''' Blockchain platforms are increasingly used to record carbon credit transactions and retirements, offering tamper-proof and transparent verification systems.<ref name=":4" /><ref name=":6" /> | |||
| # '''Corporate Leadership''' Major corporations are setting internal carbon fees and investing in high-quality offsets, demonstrating a leadership role in advancing carbon retirement practices.<ref name=":5" /><ref name=":7" /> | |||
| # '''Nature-Based Solutions''' Retirement programs now focus on projects with co-benefits, such as biodiversity conservation, reforestation, and community development.<ref name=":2" /><ref name=":7" /><ref name=":8" /> | |||
| ---- | |||
| === Case Studies === | |||
| # '''European Union Emissions Trading System (EU ETS)''' The EU ETS mandates the retirement of unused emissions allowances to avoid market saturation and ensure the cap on emissions achieves its intended reductions.<ref name=":1" /><ref name=":3" /> | |||
| # '''Microsoft’s Carbon Negative Plan''' | |||
| Microsoft has pledged to become carbon negative by 2030, which includes retiring substantial amounts of carbon credits to offset its historical emissions.<ref name=":5" /> | |||
| # '''Gold Standard’s Voluntary Retirement Initiative''' Gold Standard-certified projects ensure high-quality offset retirements, delivering measurable social and environmental co-benefits.<ref name=":4" /><ref name=":8" /> | |||
| ---- | |||
| === Future Outlook === | |||
| Carbon retirement is poised to play a pivotal role in achieving global net-zero emissions goals. Emerging trends include: | |||
| * '''Technological Integration:''' Blockchain and artificial intelligence are enhancing the transparency and traceability of carbon markets.<ref name=":6" /><ref name=":7" /> | |||
| * '''Policy Harmonization:''' International efforts are underway to standardize carbon retirement practices and improve cross-border coordination.<ref name=":1" /><ref name=":3" /><ref name=":8" /> | |||
| * '''Increased Emphasis on Equity:''' Addressing imbalances between developed and developing nations is critical for fostering global participation.<ref name=":2" /><ref name=":8" /> | |||
| ⚫ | === References === | ||
| {{Reflist}} | {{Reflist}} | ||
Revision as of 16:44, 6 December 2024
Carbon emission reduction scheme | This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages)
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Carbon retirement refers to the process of permanently canceling carbon credits or emissions allowances, ensuring they cannot be traded or used for offsetting purposes. This approach is critical in ensuring the environmental integrity of carbon markets and contributes directly to climate change mitigation. Carbon retirement is used in both compliance-driven and voluntary carbon markets, where entities choose to retire credits to demonstrate their commitment to sustainability goals
Historical Context
The roots of carbon retirement lie in the development of carbon markets under international climate agreements like the Kyoto Protocol (1997) and the Paris Agreement (2015). These frameworks introduced mechanisms such as the Clean Development Mechanism (CDM) and cap-and-trade systems. These markets allowed entities to buy and sell emissions credits to meet reduction targets.
Over time, concerns about the oversupply of allowances, low-quality offsets, and market manipulation led to calls for stricter measures. Initiatives like the Verified Carbon Standard (VCS) and Gold Standard emerged to ensure accountability and promote the voluntary retirement of credits to strengthen market credibility.
Mechanisms of Carbon Retirement
1. Voluntary Retirement
Voluntary retirement occurs when companies or individuals purchase and retire carbon credits, ensuring that these credits are permanently removed from the market.
- Example: Microsoft and Google have integrated voluntary carbon retirement into their sustainability strategies as part of their carbon neutrality goals.
2. Mandatory Retirement
Mandatory retirement is implemented in regulatory systems like the European Union Emissions Trading System (EU ETS), where surplus credits are systematically retired to maintain market integrity and environmental effectivenes.
3. Offset Retirement Registries
Offset retirement registries, such as Verra and Gold Standard, ensure transparency and traceability by documenting every step of a credit’s lifecycle, including its eventual retirement.
Importance of Carbon Retirement
1. Environmental Integrity
By retiring credits, emissions reductions become permanent, and the potential for double-counting or fraud is mitigated.
2. Market Stability
Retirement helps reduce the oversupply of credits in compliance and voluntary markets, ensuring higher credit prices and incentivizing investment in emissions reduction projects.
3. Public Trust
Organizations engaging in carbon retirement demonstrate accountability and build trust among stakeholders, including consumers, investors, and regulators.
Challenges
1. Verification and Quality Assurance
Ensuring that retired credits represent real, measurable emissions reductions remains a challenge. Poorly validated projects or fraudulent practices undermine market confidence.
2. Economic Impact
The cost of retiring credits can discourage participation by smaller businesses and developing countries reliant on low-cost compliance measures.
3. Equity Issues
Many offset projects are located in developing nations, while the benefits of retirement often accrue to entities in developed countries. This raises concerns about the equitable distribution of climate benefits.
Innovations in Carbon Retirement
- Blockchain Technology Blockchain platforms are increasingly used to record carbon credit transactions and retirements, offering tamper-proof and transparent verification systems.
- Corporate Leadership Major corporations are setting internal carbon fees and investing in high-quality offsets, demonstrating a leadership role in advancing carbon retirement practices.
- Nature-Based Solutions Retirement programs now focus on projects with co-benefits, such as biodiversity conservation, reforestation, and community development.
Case Studies
- European Union Emissions Trading System (EU ETS) The EU ETS mandates the retirement of unused emissions allowances to avoid market saturation and ensure the cap on emissions achieves its intended reductions.
- Microsoft’s Carbon Negative Plan
Microsoft has pledged to become carbon negative by 2030, which includes retiring substantial amounts of carbon credits to offset its historical emissions.
- Gold Standard’s Voluntary Retirement Initiative Gold Standard-certified projects ensure high-quality offset retirements, delivering measurable social and environmental co-benefits.
Future Outlook
Carbon retirement is poised to play a pivotal role in achieving global net-zero emissions goals. Emerging trends include:
- Technological Integration: Blockchain and artificial intelligence are enhancing the transparency and traceability of carbon markets.
- Policy Harmonization: International efforts are underway to standardize carbon retirement practices and improve cross-border coordination.
- Increased Emphasis on Equity: Addressing imbalances between developed and developing nations is critical for fostering global participation.
References
- "EU Emissions Trading System (EU ETS) - European Commission". climate.ec.europa.eu. Retrieved 2024-12-06.
- ^ "Our Sustainability Journey | Microsoft CSR". Microsoft. Retrieved 2024-12-06.
- ^ "On Carbon Credits, Tell the Whole Story | Opinion: On carbon credits, tell the whole story - Verra CEO". Verra. 2024-09-24. Retrieved 2024-12-06.
- ^ "On Carbon Credits, Tell the Whole Story | Opinion: On carbon credits, tell the whole story - Verra CEO". Verra. 2024-09-24. Retrieved 2024-12-06.
- ^ "Mobilizing Voluntary Carbon Markets to Drive Climate Action Recommendations". Gold Standard. Retrieved 2024-12-06.
- ^ "US Principles for High Integrity Carbon Markets Could Drive Private Sector Climate Action". www.edf.org. 2024-05-28. Retrieved 2024-12-06.
- ^ "Our third decade of climate action: Realizing a carbon-free future". Google. 2020-09-14. Retrieved 2024-12-06.
- ^ "Transparency, liquidity and integrity in the voluntary carbon market". Environmental Finance. Retrieved 2024-12-06.
- ^ "Initiatives - IETA". www.ieta.org. Retrieved 2024-12-06.
- ^ Cogswell, Nathan; Warszawski, Nate (2022-03-14). "5 Challenges the UNFCCC Must Overcome To Spur Climate Action".
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