The Role of Carbon Credits in Scaling Up Innovative Clean Energy Technologies How high-quality carbon credits could accelerate the adoption of low-emissions hydrogen, sustainable aviation fuels and direct air capture INTERNATIONAL ENERGY AGENCY The IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy, demand side management and much more. Through its work, the IEA advocates policies that will enhance the reliability, affordability and sustainability of energy in its 31 member countries, 13 association countries and beyond. This publication and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Source: IEA. International Energy Agency Website: www.iea.org IEA member countries: IEA association countries: Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Japan Korea Lithuania Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Republic of Türkiye United Kingdom United States Argentina Brazil China Egypt India Indonesia Kenya Morocco Senegal Singapore South Africa Thailand Ukraine The European Commission also participates in the work of the IEA The Role of Carbon Credits in Scaling Up Innovative Clean Energy Technologies Abstract Abstract Achieving net zero requires rapid development of technologies such as lowemissions hydrogen, sustainable aviation fuels (SAF), and direct air capture and storage (DACS). The IEA and GenZero report explores how carbon credits can incentivise their deployment. Massive scaling-up is needed: low-emissions hydrogen production needs to jump from almost zero today to 70 million tonnes by 2030; SAF’s share of final energy consumption in aviation needs to rise from close to zero today to around 11% by 2030; and annual removals of CO2 via DACS need to reach almost 70 Mt CO2 in 2030, from almost zero today. Investment must also increase dramatically. Governments can unlock investment through a mix of policies and financing instruments. Carbon credits can play an important role, especially in attracting private capital and accelerating technology adoption. PAGE | 3 IEA. CC BY 4.0. Carbon credits cannot bridge the investment gap on their own, and governments and the private sector need to develop strategies to create the right enabling environment for investments. Moreover, the current low availability of crediting methodologies hinders the generation of carbon credits from low-emissions hydrogen, SAF and DACS, but the landscape is shifting. A coalition of stakeholders should develop clear guidance on emissions accounting, and efforts to get better data on emissions are necessary to provide the foundation for such guidance. The Role of Carbon Credits in Scaling Up Innovative Clean Energy Technologies Table of contents Table of contents Acknowledgements ................................................................................................................ 5 Executive summary ................................................................................................................ 7 1. Introduction ....................................................................................................................... 10 To shift onto a 1.5°C trajectory, the world must accelerate global clean energy investments, especially on key technologies ............................................................................................ 10 Carbon credits can help to catalyse investment in innovative low-emissions technologies . 11 Initiatives to strengthen environmental integrity and restore trust and transparency in carbon markets ............................................................................................................................... 16 2. State of play for low-emissions hydrogen, sustainable aviation fuels and direct air capture and storage ............................................................................................................. 19 State of play for low-emissions hydrogen ............................................................................ 19 State of play for sustainable aviation fuels ..................................