The Voluntary Carbon Markets Integrity Initiative (VCMI) and the Global Green Growth Institute (GGGI) have unveiled a joint research initiative to explore the role that carbon markets could play in helping climate-vulnerable countries finance adaptation measures.
The initiative follows on from calls made at COP30 in Brazil last year to triple adaptation finance by 2035, and will examine how governments can use carbon credit markets to generate additional funding for climate resilience while developing policy frameworks that support participation in international carbon markets.
As the VCMI and GGGI noted, affected countries are facing a widening adaptation finance gap, with global adaptation finance needs estimated at between $310 billion and $365 billion annually by 2035. This compares with international public adaptation finance flows of just $26 billion in 2023.
The initiative also follows on from new research that suggests that carbon-related projects could represent a ‘significant source’ of adaptation finance in the future – recent modelling indicates that if carbon credits account for just a fifth of revenue in nature-based resilience solutions, this could amount to as much as $50 billion for climate adaptation.
‘On the front line’
“Climate-vulnerable countries are on the front line of climate impacts and face a widening adaptation finance gap,” commented George Hodgetts, manager for policy and partnerships at VCMI.
“Carbon markets, although not a silver bullet, can serve as an effective tool to help close the gap. Carbon markets are one of several key levers that could help unlock an additional $20 billion in annual financing for climate-vulnerable countries, provided these countries are strategically positioned to participate. Countries that act now to align their carbon market frameworks with adaptation priorities can shape the market.”
The findings of the research will inform GGGI’s Carbon Transaction Facility (CTF) Readiness Programme, which provides technical assistance on Article 6 of the Paris Agreement, and will also be shared through VCMI’s Access Strategies Programme and policymaker networks.
Adaptation finance gap
“The adaptation finance gap remains substantial, and achieving the goal of tripling adaptation finance will require identifying new sources of funding, including the potential contribution of carbon markets,” commented Nicholas Taylor, adaptation and resilience lead at GGGI.
“Stronger policy and supportive regulatory frameworks are indispensable to unlock carbon finance with adaptation co-benefits, with many such projects already in existence.”
The research initiative is commencing this summer, with the two groups scheduled to publish a report on the outcomes this coming November. Read more here.
