In order to fight climate change and keep the Paris Agreement goals within reach, mobilization of funding from the private sector will play a key role. By allowing companies to support climate action outside their value chains on a voluntary basis, the voluntary carbon market (VCM) is one of the tools that could contribute to this objective. Building on this rationale, the Energy Transition Accelerator (ETA) was launched as a public-private initiative with the objective of accelerating the decarbonization of the power sector in developing countries through sectoral crediting. It thus targets the part of the economy that is of utmost relevance for climate change mitigation, not only because it is a key source of GHG emissions in most countries, but also due to its potential to support the transition in other sectors. As a sector-based crediting approach the ETA could allow for a broader sectoral transformation, while simultaneously addressing the shortcomings of project- or program-based crediting. The ETA is still under development and key design elements are being discussed, including the design of the crediting standard and potential uses of ETA credits.
Against this background, this policy paper explores the current status of the ETA and its sectoral crediting standard by analyzing key elements of the standard and the basic rationale of the initiative. It discusses the ETA by taking into consideration recent public policy developments as well as private governance developments that are relevant for the future of the VCM, while also addressing challenges such as additionality and transparency.
Kreibich, N. (2024): The Energy Transition Accelerator. Using carbon crediting to foster sectoral transformation. Wuppertal Institute for Climate, Environment and Energy. Wuppertal - 28 p., URL: www.carbon-mechanisms.de/ETA.
Date:
November 2024
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