In the voluntary carbon markets - unlike compliance schemes - buyers are choosing to purchase credits to address a whole host of reasons related to their corporate and climate strategies.
Government and businesses that wish to reduce their carbon impacts are funding projects and enabling the continued growth of voluntary markets. The voluntary markets do not work with the same forces as those that drive the compliance markets and, as such, the future state of the markets relies - and has the opportunity to focus - on strong efforts to bolster new and sustained demand for ambitious voluntary carbon management including the use of offsets, according to the latest IETA report.
Both the public and private sector can use market mechanisms to drive emissions reductions in unregulated sectors, further driving emissions reductions beyond regulatory requirements by utilising the voluntary market. It is down to both government and industry leaders to provide leadership and steer issues such as supply-and-demand management that will see through the continuing success of the voluntary markets.
Quality assurance is readily available and market demand is driving highest quality
Business buyers (quite often large multinational corporations) with stringent internal process and management controls are driving the market demand for high quality carbon credits. These “corporates” are requesting credits generated with social and environmental impact and benefit assessments that are completed to internationally recognised standards and can be traced through an independent registry. The market has matured in recent years, and buyers appear to have a preference for credits that have been verified to internationally recognised standards to assure environmental and social integrity.
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With the projected growth in the market at a suggested figure of 2.5 billion US dollars by 2020, it is important that leaders in the voluntary markets guide its direction and continue to champion consistent standardised and rigorous approaches. The voluntary markets industry plays a role in educating business on carbon management and broader climate change risk and impacts. This is a necessary step to engaging potential purchasers. Much of this work is driven by the carbon-offset retailers.
Project developers are also starting to focus on how to engage with businesses to generate buyers and exchanges are providing a platform to facilitate sales. Given the market is quick to innovate, flexible to rectify market failures, and internationally applicable, it is also providing a framework and interest area to multinational corporate climate leaders wishing to address their supply chain impacts or incite internal carbon reduction behaviours. Buyers in the voluntary markets are driven by such factors as consumer pressure, a desire for demonstrating “climate leadership”, corporate social responsibility (CSR), de-risking their business operations against climate change and seeking efficiency improvements through management strategies.