Weekly News: 30/6/2025 - 6/7/2025
What just happened?
1. EU to include international carbon credits in its 2040 climate goal
The European Commission has proposed allowing up to 3 percentage points of the EU’s 2040 emissions reduction target (90% cut from 1990 levels) to be met using internationally sourced carbon credits, starting in 2036. These credits must meet strict quality and origin criteria mpg.de+7reuters.com+7ndtv.com+7theguardian.com+5reuters.com+5downtoearth.org.in+5.
2. Microsoft inks deal for soil-based carbon credits
Microsoft and Agoro Carbon have signed a 12-year offtake agreement for 2.6 million soil-derived carbon credits. The deal supports regenerative agriculture practices technologymagazine.com.
3. Global standards being introduced to improve credit credibility
New global standards and UN-backed rules (under Paris’s Article 6.4 and the PACM) aim to enhance transparency and prevent greenwashing, but transitioning legacy projects from the Kyoto CDM system may still produce overly generous credits unfccc.int+1carbonmarketwatch.org+1.
What does it mean?
EU flexibility with caution: Permitting up to 3% of targets via credits introduces flexibility for hard-to-abate sectors but risks undermining domestic decarbonisation if credit quality is weak carbonmarketwatch.org+10reuters.com+10carbonmarketwatch.org+10.
Corporate leadership and risk: Microsoft’s soil-carbon deal reflects tech companies’ evolving role in funding high-integrity carbon removals—and could influence how AI and tech firms manage emissions.
Integrity concerns persist: Despite new rules, reports indicate many existing credits (especially from CDM-style projects) are exaggerated or low-integrity—potentially delivering only a fraction of claimed emission reductions sgs.com+2unfccc.int+2technologymagazine.com+2carbonmarketwatch.org+1phys.org+1.
How does this impact you? (PESTLE analysis)
Political: The EU’s carbon-credit policy may face resistance from climate hawks worried it dilutes domestic action—expect lively policy debates.
Economic: High-integrity credits like soil-based methods may carry a premium, raising costs for businesses buying offsets. This could eventually affect consumer prices for digital services or goods tied to these companies.
Social: Increased scrutiny of offset projects may enhance public trust, but revelations of low-quality credits could spur backlash against misleading claims.
Technological: Improved monitoring, reporting, and verification (MRV) systems—such as blockchain pilots by banks like JPMorgan—are likely to gain traction. Expect better tech for tracking credit integrity.
Legal: Tighter global standards under PACM and UN frameworks mean companies must favour verifiable credits or risk regulatory or reputational penalties.
Environmental: If high-integrity credits proliferate, real-world benefits like soil regeneration and ecosystem protection could scale up. Conversely, reliance on poor-quality offsets undermines climate goals.
Bottom line
For businesses and consumers: Be cautious—charges labelled as carbon-offsets may vary wildly in actual impact.
For investors and corporates: Focus investments on credits supported by scientific monitoring, robust MRV, and aligned with new UN/EU standards.
As an individual: Look for transparency—prioritize companies offsetting through projects like Microsoft/Agoro’s soil carbon initiative, which are more likely to provide genuine environmental gains.
