Voluntary Markets

Emerging in parallel to the CDM ‘compliance’ market has been a voluntary carbon offset market.  Buyers in the voluntary market are from both developed and developing countries and can be organizations, governments, individuals, companies, and any other entity. In this arena the purchase of credits is not to ensure compliance with a regulatory obligation, but is driven largely by corporate social responsibility and branding initiatives (such as marketing a company as ‘carbon neutral’) or by individual purchases of credits to offset personal behaviour (such as air travel). 

 

The quality of voluntary emission reductions is an important issue. In response to early concerns about the lack of independent verification of voluntary offset projects (such as what exists for the CDM UN-based verification process), project developers have now embraced a range of tools and methodological standards to prove the legitimacy of their credits. These include the Voluntary Carbon Standard (VCS), Chicago Climate Exchange (CCX), CarbonFix, Plan Vivo, VER+ and Gold Standard, as well as some developed with emphasis on community and biodiversity co-benefits, such as the Climate, Community & Biodiversity Standard (CCBS).

These voluntary certification methodologies are important for Africa in several key respects. Foremost, they include methods for certifying emissions reductions within the agriculture, forestry and other land use (AFOLU) sectors, which are of most relevance to the African setting but for the most part have been excluded from the CDM. Furthermore, some of these methodologies are seen as testing grounds for potential future compliance methods – a sort of parallel track that enables participation in markets without having to wait for a lengthy UN approval process. 

 

The voluntary markets have seen enormous growth in the past several years, doubling from 2007 to 2008 when they reached over $700 million (New Energy Finance).  Although 2009 saw a slowdown from the global financial crisis, demand for voluntary credits is on the rise again.