Carbon markets are advancing on a global level, following the first country-to-country trades at COP27. The Energy Podcast investigates how carbon pricing works and examines what role it can play in the race to reduce greenhouse gas emissions.

Presented by Julia Streets. Featuring Dr Hasan Muslemani from the Oxford Institute of Energy Studies, Andrea Bonzanni from the International Emissions Trading Association and Shell’s senior carbon pricing policy advisor, Dr Malek Al-Chalabi. With additional contribution by Stephen Kansuk, Head of Environment and Climate Change at the United Nations in Ghana.

The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis.

EPISODE TRANSCRIPT:

00:00
Julia Streets: Today  on  The  Energy  Podcast...

MUSIC BED COMES IN

Andrea Bonzanni: Emissions must be reduced globally irrespective of where they take place. The atmosphere is one at the end of the day. Article VI allows reducing emissions where it’s more efficient.

Dr Hasan Muslemani: We have solutions that are being praised as the holy grail of net- zero… The issue is that we need all the solutions that we can get because in the fight against climate change, we are really in a race against time.

Julia Streets: The  cost  of  climate  change.  It's  a  phrase  commonly  used  by  governments,  companies,  and  campaigners  across  the  world  when  discussing  the  need  to  limit  global  warming  to  well  below  two  degrees  Celsius.  Quantifying  the  exact  cost  of  far- reaching  effects  of  climate  change  is  not  an  easy  task.  But  putting  a  price  on  emissions  is  viewed  by  many  as  an  effective  means  to  help  drive  down  levels  of  CO2  in  the  atmosphere.  The  idea  is  simple.  Putting  a  price  on  carbon  emissions  creates  a  financial  incentive  to  reduce  them.
Carbon  markets  have  existed  for  decades.  There  are  many  carbon  pricing  systems  around  the  world,  but  at  present,  it  is  estimated  that  only  a  quarter  of  emissions  are  priced.  That  could  soon  change.  At  last  year's  COP27  climate  conference  in  Egypt,  the  first  country- to- country  carbon  trades  took  place.  Could  this  pave  the  way  for  further  uptake  of  carbon  trading  and  what  impact  could  that  have  in  the  fight  against  global  warming?

Hello,  I'm  Julia  Streets,  and  today  on  The  Energy  Podcast:  How  can  carbon  markets  limit  climate  change?

MUSIC ENDS  

With  me  to  discuss  this  are  Andrea  Bonzanni,  who's  the  international  policy  director  at  the  International  Emissions  Trading  Association,  who  you  may  well  remember  from  a  previous  episode  of  The  Energy  Podcast.  He  is  joined  by  Dr.  Hasan  Muslemani, who is  the  head  of  Carbon  Management  Research  at  the  Oxford  Institute  for  Energy  Studies.  And  our  third  guest  is  Dr.  Malek  Al- Chalabi,  who  is  a  senior  carbon  pricing  policy  advisor  at  Shell.

Hasan,  perhaps  I  could  start  with  you.  For  the  benefit  of  the  audience,  would  you  just  mind  explaining  what  we  mean  when  we  talk  about  carbon  markets?

02:18
Dr. Hasan Muslemani: The  fundamental  concept  behind  a  carbon  market  is  really  to put  a  price  on  carbon,  or  in  other  words,  to  quantify  the  cost  of  damages  that  emissions  will  cost  our  society  over  time.  To  do  this,  we  have, at  the  heart  of  carbon  markets,  what  is  called  carbon  accounting  or  greenhouse  gas  accounting.  This  represents  a  set  of  standards  and  methods  that  help  us  quantify  but  also  verify  the  impact  that  each  business  creates  on  the  environment,  and  this  impact  is  reported  in  terms  of  tons  of  CO2  emitted.
 Now,  something  that  I  really  want  to  emphasize  here  is  that  today,  we  speak  of  carbon  markets,  but  we  need  to  differentiate  between  two  different  types  of  markets.  The  first  is  what  we  call  a  compliance  market,  which  is  a  market  that  is  heavily  regulated  and  corresponds  to  a  specific  region  or  jurisdiction,  and  where  companies  within  that  jurisdiction  have  to  take  part  in  the  market.  The  other  one  is  a  voluntary  one.  This  is  a  lot  less  regulated  and  where  participation  is  voluntary,  as  the  name  implies.  The  voluntary  carbon  market  is  based  on  the  concept  of  offsetting.  That  is  where  a  company  wishes  to  mitigate  or  neutralize  its  own  emissions.  So,  it  goes  out  and  invests  in  projects  which  are  reducing  equivalent  amounts  of  emissions  elsewhere  in  the  world.

03:30
Julia Streets: Can  you  talk  to  us a little bit about how  they  work  in  practice  in  everyday  terms?

03:36
Dr. Hasan Muslemani: Starting  on  the  compliance  markets, and  the  objective  is  really  to  put  a  price  on  carbon,  there's  two  different  ways  to  do  this.  The  first  one  is  carbon  taxation,  which  should  be  a  simple  concept.  We  have  countries  like  Norway  and  Denmark,  which  would  impose  a  specific  tax  on  every  ton  of  CO2  that  a  company  would  produce  within  those  countries.  The  key  here,  really,  is  for  that  carbon  tax  to  be  high  enough  to  incentivize  businesses  to  change  behavior  or  to  move  to  greener  production.  This  is  essentially  a  stick  form  of  regulation  where  businesses  have  to  lower  their  emissions  or  face  an  additional  cost.
 The  other  mechanism,  which  is  a  cap  and  trade  mechanism,  which  is  the  more  familiar  one,  and in  this  system  we  have  an  authority,  say,  the  European  Commission,  which  sets  a  cap  on  how  much  emissions  can  be  generated  as  a  whole  within  the  continent,  within  Europe,  and  then  allocates  a  number  of  allowances  or  carbon  credits  to  European  countries  and  companies  for  them  to  trade  amongst  each  other.  Here,  each  carbon  credit  or  allowance  is  representative  of  one  ton  of  CO2.
 This  allocation  process,  what  I  want  to  note,  is  done  using  the  historical  emissions  of  each  one  of  these  companies.  This  is  a  process  that  we  call  grandfathering.  The  overall  cap  is  reduced  each  year  in  order  to  meet  a  certain  European  climate  target  in  the  future.  The  way  this  works  is  where  companies  that  have  lowered  their  emissions  below  their  targets,  now  they  have  surplus  of  allowances,  which  they  can  go  into  the  market  and  sell  to  companies  that  did  not  do  so  well  and  will  require  to  buy  credits.  So,  this  mechanism  really  is  sort  of  a  carrot  but  also  a  stick  sort  of  regulation.

05:12
Julia Streets: Thank  you  for  explaining  how  they  work.  I  suppose  my  next  question,  is  how  effective  are  they  proving  to  be?

05:19
Dr. Hasan Muslemani: The  longest  running  and  actually  the  biggest  ETS  in  the  world,  that  is  the  EU ETS  or  emission  trading  scheme.  This  has  started  in  2008  and  has  gone  through  different  phases  over  the  years.  But  I  do  want  to  mention  that  it  has  suffered  from  a  number  of  setbacks  over  those  years.  To  give  an  overview,  the  carbon  price  at  the  beginning  was  around  30  euros  per  ton,  but  that  price  has  crashed  to  less  than  5  euros  around  the  financial  crisis  of  '09.  This  was  most  likely  because  of  two  main  reasons.  The  first  one  is  that  companies  had  to  report  their  emissions  in  such  a  regulated  manner  that  they  have  not  done  before,  and  so  they  might  have  overestimated  how  much  emissions  they  emit  and  hence  how  much  allowances  they  eventually  received  from  the  system.  But  also,  because  of  the  financial  crisis  itself,  it  meant  that  business  offices  aren't  lit,  emissions  aren't  as  high  as  usual,  so  they  did  not  need  to  surrender  as  much  allowances  at  the  end  of  the  compliance  phase,  which  eventually  meant  there's  an  oversupply  of  credits  in  the  market,  and  so  the  price  has  crashed.
 The  good  news  is  the  EU ETS  has  gone  through  sort  of  a  recovery  mode  over  the  past  10  years,  and  today  the  price  has  not  only  recovered  but  reached  the  level  which  is  believed  to  incentivize  most  sectors  to  lower  emissions,  and  that  level  is  around  100  euros  per  ton.

06:41
Julia Streets: It's  been  so  helpful  to  get  a  sense  of  progress,  thinking  about  the  dynamics  of the  market  since  launch,  and  also  to  think  about  the  market  share.
 Andrea,  let  me  bring  you  in  here  because  this  is  about  the  world's  attempts  to  limit  global  warming  to  well  below  two  degrees  Celsius,  in  line  with  the  Paris  Agreement.  Are  we  likely  to  see  the  growth  of  carbon  markets  in  pursuit  of  this  great  ambition?

07:03
Andrea Bonzanni: Well,  we  know  that  meeting  the  goals  of  the  Paris  Agreement  requires  a  radical  transformation  of  many  areas  of  our  economies  and  our  lives,  and  for  the  reason  outlined  by  Hasan,  carbon  markets  and  carbon  pricing  in  general  are  one  of  the  tools  that  governments  are  increasingly  considering.  Carbon  markets  are  spreading  from  a  core  of  rich  runs  economies  such  as  the  EU,  California,  South  Korea, and  New  Zealand,  to  middle- income  and  emerging  countries.  This  year,  we  had  Mexico  and  Indonesia  launching  their  emission  trading  systems,  and  the  two  schemes  are  expected  to  expand  and  evolve  over  time.  There  are  other  countries  in  Southeast  Asia  and  Latin  America  that  are  implementing  carbon  markets,  and  even  some  African  countries  are  starting  to  consider  them.

07:45
Julia Streets: Andrea,  when  we  last  spoke,  you  would  just  at  COP27.  As  I  mentioned  in  the  introduction,  that's  when  the  first  country- to- country  carbon  trade  took  place.  Could  you  tell  us  a  bit  more  about  that and  what  happened  at  COP27?

07:58
Andrea Bonzanni: Sure.  At  COP27,  Ghana  authorized  the  transfer  to  Switzerland  of  certified  emission  reductions.  This  transaction  was  the  first  of  its  kind  under  Article  VI  of  the  Paris  Agreement.  There  were  emission  reductions  generated  in  Ghana  thanks  to  the  implementation  of enhanced  rice  production  techniques  that  avoided  CO2  and  methane  emissions.  These  emissions  will  be  counted  towards  the  climate  target  of  Switzerland.  In  turn,  Ghana  commits  to  apply  a  corresponding  adjustment  to  its  emission  account.
 Mechanisms  like  this  have  vast  potential  to  generate  investment  flows  in  climate  change  mitigation  and  sustainable  development  from  the  Global  North  to  the  Global  South.  Article  VI is  still  a  small,  nascent  market,  but  we  expect  it  to  grow  and  countries  are  looking  to  buy  and  sell  emissions  to  each  other.
 In  addition  to  Ghana  and  Switzerland,  after  COP27,  another  transfer  was  authorized,  this  time  from  Thailand  to  Switzerland.  A  country  like  Japan  has  26  bilateral  agreements  with  countries  around  the  world  and  is  looking  to  import  emission  reductions  in  the  near  future.  Countries  like  Singapore,  South  Korea,  New  Zealand  and  Canada  are  all  looking  to  purchase  carbon  reduction  from  abroad.  Many  countries  around  the  world,  mostly  developing  countries,  are  preparing  and  getting  ready  to  become  sellers  in  this  market.

09:20
Julia Streets: Andrea,  just  picking  up  on  one  of  the  comments  you  made  there.  One  project  being  implemented  under  the  Ghana- Switzerland,  Article  VI  carbon  pricing  deal  is  a  UN  initiative  that  aims  to  reduce  greenhouse  gas  emissions  from  rice  cultivation  by  training  local  farmers  in  sustainable  agriculture  practices.  Rice  cultivation  currently  accounts  for  over  10%  of  global  methane  emissions,  and  this  is  because  the  main  method  of  rice  farming  involves  flooding  the  fields,  which  prevents  oxygen  from  penetrating  the  soil,  causing  a  buildup  of  bacteria.  This  bacteria  emits  methane  into  the  atmosphere,  contributing  to  global  warming.
 The  United  Nations  Development  Program  aims  to  promote  climate- smart  rice  cultivation  for  Ghanian  farmers,  leading  to  a  significant  reduction  in  methane  emissions.  Stephen  Kansuk,  Head  of  Environment  and  Climate  Change at  the  United  Nations  in  Ghana,  speaking  from  the  capital  Accra,  told  us  more….

10:18
Stephen Kansuk: In  Ghana,  rice  is  cultivated  as  both  food  and  cash  crop.  Research  shows  that  in  2020,  Ghana's  total  rice  consumption  was  about  1. 4  million  metric  tons.  To  support  rice  farmers  to  reduce  methane  emissions  in  Ghana,  the  United  Nations  Development  Program,  the  Ministry  of  Environment  Science  Technology  Innovation,  the  Ministry  of  Food  and  Agriculture,  and  the  Environmental  Protection  Agency,  all  in  Ghana,  and  the  future  office  for  the  environment  in  Switzerland  are  implementing  a  climate- smart  rice  project.
 The  project  is  supporting  over  7, 000  rice  farmers  across  Ghana  to  adopt  an  alternate  wet  and  drying  technology  in  rice  cultivation  to  reduce  methane  emissions.  This  project  is  one  of  the  initiatives  under  a  partnership  between  the  government  of  Switzerland  and  Ghana.  The  agreement  is  to  allow  public  and  private  institutions  to  collaborate  to  invest  in  climate  change  mitigation  interventions  in  Ghana  and exchange  carbon  credits  with  Switzerland  for  payments.
 In  terms  of  benefits  with  this  climate  smart  rice  project,  our  target  is  to  achieve  about  1. 1  million  tons  of  carbon  dioxide  equivalents,  emission  reduction  targeted  by  2030.  The  project  will  also  provide  extra  incomes  for  the farmers  as  a  carbon  revenue  through  a  performance  bids  payment  system,  and  this  will  help  increase  their  resilience.  The  project  is  also  helping  to  create  a  number  of  jobs  at  the  rural  level  so  that  they  will  be  able  to  adapt  effectively  to  the  impact  of  climate  change.

12:14
Julia Streets: Andrea,  I  wonder  if  I  could  bring  you  in  because  there  has  been  some  reaction  that  has  accused  governments  of  rich  countries  of  outsourcing  their  emissions  reductions  to  governments  of  developing  countries.  Is  that  fair?

12:27
Andrea Bonzanni: Emissions  must  be  reduced  globally  irrespective  of  where  they  take  place.  The  atmosphere  is  one  at  the  end  of  the  day.  Article  VI  allows  reducing  emissions  where  it's  more  efficient,  deploying  capital  where  it  can  abate  or  remove  more  emissions.  Researchers  have  quantified  the  cost  savings  of  meeting  climate  targets  used  in  Article  VI  will  be  up  to  250  billion  US  dollars  a  year  by  2030.
 There  is  a  perception  out  there  that  projects  reducing  emissions  abroad  replace  strong  climate  action  at  home.  But  I  don't  think  there  is  evidence  supporting  this  thesis.  In  the  longer  run,  achieving  net- zero  means  that  every  ton  of  CO2  emitted  must  be  compensated  by a ton of  CO2  removed  from  the  atmosphere.  It  is  not  rational  to  believe  that  all  countries,  especially  European  ones,  can  get  to  net- zero  without  using  international  carbon  market  mechanisms.  International  carbon  markets  deploy  investments  in  things  like  natural  climate  solutions  or  emission  removal  technologies,  such  as  direct  air  captures,  bioenergy  with  CCS,  and  then  deploy  the  capital  where  these  projects  are  feasible.  Not  all  geographies,  not  all  jurisdictions  have  the  potential  to  scale  these  solutions  and  achieve  net- zero  within  their  borders.
 Rich  countries  need  strong  climate  action  both  at  home  and  abroad,  and  we  need  carbon  markets.  We  need  well- designed  one.  80%  of  countries  in  their  nationally  determined  contributions  said  that  they're  planning  to  use  carbon  markets  to  meet  their  goals.  So,  we  should  start  implementing  carbon  markets  soon  and  let  investment  flows  from  rich  countries  into  developing  countries.

14:02
Julia Streets: So we've  explored  this  from  the  point  of  view  of  what  are  carbon  markets.  We've  thought  about  this  from  an  international  global  sort  of  point  of  view,  and  whether  or  not  this  is  fair  from  a  jurisdiction  point  of  view.  We've  also  heard  about  a  real  case  study  and  its  application  of  where  some  of  this  collaboration  comes  in.
 Malek,  could  I  ask  you,  from  a  corporate  point  of  view,  why  does  this  particularly  matter  to  a  company  like  Shell?

14:25
Dr. Malek Al-Chalabi: Yeah,  thanks.  Thanks,  Julia.  At  Shell,  we've  set  a  target  to  become  a  net- zero  emissions  energy  business  by  2050,  and  our  policy  positions  on  climate  and  energy  transition  serve  as  a  global  framework  for  Shell's  advocacy  with  governments,  international  organizations,  and  associations.  This  includes  supporting  government  policies  that  will  help  the  world  to  achieve  net- zero  emissions  by  2050.  A  variety  of  policy  tools  are  required,  one  of  which  is  carbon  pricing,  and  at  Shell,  we  advocate  to  put  a  direct  price  on  carbon  emissions  as  part  of  a  broader  policy  framework  to  achieve  net- zero  emissions.  The  carbon  price,  whether  through  tax,  cap  and  trade,  or  hybrid  system,  should  apply  to  as  many  sectors  of  the  economy  as  possible  and  increase  over  time.  Additionally,  Shell  advocates  for  greater  international  cooperation  through  systems  that  transfer  carbon  credits  between  countries  and  ensure  that  international  carbon  credit  transactions  have  environmental  integrity  by  avoiding  double- counting  across  national  inventories.  In  summary,  a  carbon  price  can  be  an  effective  mechanism,  and  success  depends  on  it  being  part  of  a  comprehensive  energy  transition  policy  framework  that  incentivizes  innovation  and  encourages  commercialization  of  new  and  clean  technologies.

15:33
Julia Streets: You  talked  there about  the  importance  of  collaboration.  I'm  curious,  what  needs  to  happen  to  get  more  countries  trading  carbon?

15:41
Dr. Malek Al-Chalabi: If  we  look  at  the  data  from  the  World  Bank  and  look  back  30  years,  the  first  carbon  prices  took  place  in the  1990s.  If  we  fast- forward  today,  there's  approximately  70  carbon  pricing  initiatives  and,  as  you've  said,  covering  25%  of  the  world's  emissions,  which  represents  a  sizable  improvement.  But  this  still  means  that  75%  emissions  are  still  unpriced,  and  more  work  needs  to  be  done  in  this  space.
 I  think  it's  important  to  recognize  a  tremendous  amount  of  work  to  operationalize  carbon  pricing  policies  has  taken  place.  The  International  Chamber  of  Commerce  at  COP26  focused  on  global  carbon  pricing  principles  that  are  needed  to  help  deploy  carbon  markets,  and  at  COP27,  a  business  review  was  also  done  to  highlight  opportunities  for  decarbonization.
 There  are  10  principles  which  include,  but  are  not  limited  to,  focusing  on  greenhouse  gas  reduction  as  a  prime  target,  creating  a  reliable  and  predictable  overall  framework,  promoting  the  linkage  of  carbon  pricing  instruments,  and  ensuring  cooperation  for  greater  consistency  globally.

16:49
Julia Streets: Hasan,  earlier  you  were  talking  about  some  of  the  market  dynamics  at  play.  I  would  love  to  get  your  thoughts  on  what  do  we  need  to  do  if  we  want  to  have  an  ambition  for  a  global  price  on  carbon?

17:01
Dr. Hasan Muslemani: First  off,  I  would  say  it's  probably  not  easy  and  may  not  even  be  possible  to  have  one  carbon  price  that  fits  all  jurisdictions  in  the  world.  This  is  because  what  may  work  for  a  country  or  a  region  or a  jurisdiction  might  not  work  for  another.  We  might  have  some  that  prefer  a  carbon  tax  mechanism,  but  others  which  might  prefer  a  cap  and  trade,  or  an  emission  trading  scheme,  or  ETS  for  short.  Not  only  that,  but  the  sectors  which  are  included  within  these  different  ETSs  in  the  world  that  we  have  today  are  not  the  same  sectors.  Some  of  them  might  include  cement  or  steel  or  oil.  Some  others  might  include  different  sectors.
 To  give  an  example  from  my  own  background,  which  is  in  steel  production  in  China,  specifically.  Producing  steel  in  China  is  much  cheaper  than  in  Europe.  That's  the  first  thing.  The  second  thing  is  measures  which  we  have  that  we  can  take  to  lower  emissions  from  steel  production  in  China  versus  in  Europe  are  different  and  their  costs  are  different.  So,  that  means  that  the  abatement  costs  for  each  company  and  each  country  are  different.
 The  problem  with  not  having  a  global  price  becomes  important  when  trading  happens  between  these  regions,  so  if  you're  importing  or  exporting  steel  into  and  out  of  Europe.  For  that  reason,  I  think  carbon  prices  should  be  complemented  with  what  we  now  call  carbon  border  adjustments.  The  EU  has  already  introduced  such  a  mechanism  that  will  come  online  as  of  October  of  this  year.  Under  these  adjustments,  what  happens  is  any  steel  that  would  be  imported  from  China  into  the  EU  will  have  to  face  the  same  carbon  tax  based  on  its  carbon  footprint.  In  that  way,  the  steel  manufacturer  is  now  subject  to  the  carbon  price  in  Europe,  the  EU  ETS  price,  creating  what  I  would  like  to  call  an  implicit  global  carbon  price.

18:47
Julia Streets: Andrea,  I'd  love  to  get  your  thoughts,  if  you  would,  about  some  of  the  risks  and  some  of  the  opportunities for Article VI? And what do  skeptics  say  about  its  limitations?

18:57
Andrea Bonzanni: Well,  the  opportunities  generated  by  Article  VI  are  obvious.  They  go  down  to  basic  economic  theory.  We have  to  reduce  or  remove  emissions  where  it's  more  efficient  because  that  will  allow  us  to  do  it  faster  and  to  do  more  at  lower  cost.  So,  we  need  an  international  mechanism  that  brings  together  countries  with  access  to  capital  and  technologies,  but  without  access  to  cheaper  emission  abatement  options,  and  on  the  other  hand,  countries  without  capital  and  technology,  but  with  plenty  of  opportunities  for  reductions.  So  that's,  to  me,  very  clear;  it's  a  mechanism  that  can  work.
 Some  of  the  risks  around  Article  VI  are  related  to  the  complexity  of  these  mechanisms,  and  this  is  where  the  skeptics  are  coming  from.  Critics  have  magnified,  in  some  instances,  the  cases  where  carbon  markets  have  not  delivered  what  they  promised.  They  highlighted  cases  where  methodologies  to  calculate  carbon  reductions  were  not  robust,  or  measurements  overstated  the  impact  of  certain  projects.  However,  the  industry  is  aware  that  markets  need  to  improve,  and  there  are  many  initiatives  to  address  market  integrity.

20:06
Julia Streets: Malek,  I'd  love  to  get  your  thoughts about what  are  your  hopes  for  the  carbon  markets  in  the  future?

20:12
Dr. Malek Al-Chalabi: I  think  if  I  build  on  what  Andrea  has  said,  I  believe  further  operationalization  of  Article  VI  country- to- country  trades  increasing  in  the  future  would  be  a  welcome  development  to  take  place.  I  think  also,  as  some  may  know,  Article  VI. 4,  which  is  the  globally  led  carbon  market  by  the  UN,  looking  to  operationalize  in  the  next  one  to  three  years  would  also  be  another  welcome  development  to  help  facilitate  carbon  markets.  But  also,  as  Hasan  has  mentioned,  the  growth  of  compliance  and  voluntary  markets  would  also  be  a  welcome  development  where  countries  can  continue  to  use  implicit  or  explicit  carbon  pricing  mechanisms  to  help  further  incentivize  low  and  clean  technologies  at  a  price  that  is  helping  assist  decarbonization  efforts.

21:07
Julia Streets: Gentlemen,  I'd  love  to  come  to  each  of  you  with  your  closing  thoughts  for  our  listeners.

21:12
Andrea Bonzanni: Carbon  markets  need  to  grow.  Growth,  growth,  growth  is  what  we  need.  We  need  to  shift  gears,  scale  up  markets,  both  in  terms  of  coverage  and  in  terms  of  price  levels.  We  said  that  about  a  quarter  of  emissions  are  priced  nowadays,  but  the  World  Bank  estimates  that  only  4%  are  priced  at  the  level  that  will  allow  us  to  achieve  the  goals of  the  Paris  Agreement.  So,  whatever  the  economic  and  geopolitical  situation,  we  cannot  afford  to  put  carbon  markets  on  hold.

21:40
Julia Streets: And Malek, what would be the one thing that you think that  the  audience  should  hang  onto  and  really  take  away?

21:45
Dr. Malek Al-Chalabi: I  think  our  message  would  be  that  to  put  a  direct  price  on  carbon  emissions  as  part  of  a  broader  policy  framework  to  achieve  net- zero  emissions,  and  whether  it's  through  a  carbon  tax,  cap  and  trade,  or  a  hybrid,  they  should  apply  to  as  many  sectors  of  the  economy  as  possible  and  increase  over  time.

22:04
Julia Streets: Hasan,  would  you  agree  with  that?  What  would  be  your  message?

22:07
Dr. Hasan Muslemani: I  think  markets  have  already  picked  up  momentum,  and  they  are  here  to  stay.  The  next  step  is  really  to  ensure  integrity  of  what's  being  traded  and  sold  in  the  market.  That  word  integrity  has  really  become  the  buzzword  in  the  carbon  market  space  lately,  where  we're  seeing  a  lot  of  quality  frameworks  being  developed  to  define  what  is  integrity.  We  have  solutions  that  are  being  praised  as  the  holy  grail  of  net- zero  solutions,  such  as  capturing  CO2  directly  from  air  or  other  solutions,  and  they're  sort  of  being  put  in  competition  with  each  other.  The  issue  is  that  we  need  all  the  solutions  that  we  can  get  because  in  the  fight  against  climate  change,  we  are  really  in  a  race  against  time.  Because  this  task  is  so  critical  to  us  as  a  human  race,  if  anything,  it's  much  better  to  be  vaguely  right  than  precisely  wrong.

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23:00
Julia Streets: It's  been  a  wonderful  conversation  because  in  such  a  short  period  of  time,  we've  thought  about  the  dynamics  of  the  carbon  markets;  we've  thought  about  some  real  use  cases  of  how  there's  been  some  international  collaboration;  we've  thought  about  why  this  matters  for  different  people.  But  we've  also  been  very  considerate  in  terms  of  where are  some  of  the  limitations  and  perhaps  some  of  the  things  that  skeptics  are  talking  about.  But  this  is  about  integrity.  This  is  about  momentum,  and  this  is  about  growth.  Exactly  as  you  say,  this  is  all  about  us  using  all  the  tools  at  our  disposal  to  drive  change  at  pace  and  at  scale.
 Andrea  Bonzanni,  Dr.  Malek  Al- Chalabi,  and  Dr.  Hasan  Muslemani,  thank  you  very  much  for  being  with  us  today.
 You've  been  listening  to  The  Energy  Podcast,  brought  to  you  by  Shell.  Listen  and  follow  for  free  wherever  you  get  your  podcast  so  you  don't  miss  a  single  episode.  The  Energy  Podcast  is  a  Fresh  Air  Production,  and  I  must  remind  you  that  the  views  you've  heard  today  from  individuals  not  affiliated  with  Shell  are  their  own  and  not  Shell,  PLC,  or  its  affiliates.  I'm  Julia  Streets.  Thank  you  for  listening,  and  until  next  time,  goodbye.

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