Carbon Brief [May 18th 2023]
Zimbabwe seizes control of carbon trade, India and the EU near an agreement on CBAM, Alaska passes bill to sell carbon credits, and Iceland's continues to receive free carbon credits.
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Alaska 🏔️🐻🌲
Alaska House of Representatives has passed a significant bill that paves the way for the state to sell carbon-offset credits using its land. Senate Bill 48, now officially approved by both the House and the Senate, allows the Alaska Department of Natural Resources to lease state land for up to 55 years to maintain its capacity to absorb atmospheric carbon. This legislation holds great importance for Governor Mike Dunleavy, who expressed gratitude on Twitter, emphasizing its potential to transform Alaska's revenue prospects.
Zimbabwe 🇿🇼🦁🌍
Zimbabwe's government has announced its intention to seize control of carbon credit production in the country, asserting its right to 50% of the revenue generated from these securities. This move renders previous agreements with international agencies null and void, as stated by the information minister, Monica Mutsvangwa. Local authorities are now prohibited from entering into any carbon credit agreements, although specifics were not provided. Additionally, foreign investors in Zimbabwe's carbon credit programs will be limited to a 30% share of the income, with the remaining 50% allocated to the treasury.
Similar to Zimbabwe, other African governments, like Gabon, are also seeking direct benefits from the carbon credit trade. Gabon aims to be compensated for preserving its vast tropical forests, which absorb carbon emissions.
India 🇮🇳🐘🌄
India and the European Union have reached an agreement to engage in ongoing discussions regarding the implementation of a carbon tax. The tax, known as the Carbon Border Adjustment Mechanism (CBAM), will be applied to exports from India to the EU starting in January 2026. The amount of tax will be determined by the price of Carbon Credits on the EU Emissions Trading System (ETS). The tax will be imposed based on the difference between the carbon emissions produced during the manufacturing process and the emission thresholds set by the EU.
To alleviate the burden on Indian industries, the government has announced its intention to advocate for the EU to recognize India's emissions certification and its upcoming Carbon Credit Trading Scheme (CCTS) being developed by the Ministry of Power. If the EU accepts India's CCTS, the tax payment for emissions exceeding the prescribed threshold will be determined by the price of credits on the Indian carbon exchange rather than the EU ETS.
Iceland 🇮🇸 ❄️🏔️
Prime Minister Katrín Jakobsdóttir and President of the European Commission Ursula von der Leyen have made an exciting announcement: the European Union and the Icelandic government have reached a preliminary agreement on Iceland's emissions. In this agreement, Iceland will continue to receive free emissions allowances until the year 2026.
The Icelandic government has been vocal about its concerns that existing rules have put Icelandic airlines at a disadvantage and have not considered the unique geographical challenges faced by Iceland, which relies more heavily on air transport compared to mainland residents. Acknowledging these concerns, von der Leyen emphasized that the Icelandic government will be invited to receive free emissions allowances that can be allocated to airlines in both 2025 and 2026.
