Key Questions About The Voluntary Carbon Market

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Key Questions About The Voluntary Carbon Market

The voluntary carbon market experienced further growth in 2007, and experts predict the pattern to be repeated through 2008. Yet this rapid expansion of the market has not been without its difficulties. As the number of consumers grow, so too does their awareness of the opportunities and pitfalls in this exciting and innovative market. 2007 saw the establishment of several standards, registries and other market mechanisms in a bid to bring credibility and transparency to the market. A year on, have these initiatives achieved their purpose, and is the market really providing the consumers with what they want?

The green marketing revolution is driving the voluntary market, and the number of European buyers is growing. But how can companies in the voluntary carbon market communicate their actions to reach consumers and profit from your green initiatives? The following are some of the questions facing them:

1) How do they reach consumers?

2) What do they need to bear in mind when making statements about 'carbon neutrality'?

3) Which avenues of communication work best in the green arena?

4) What are the key considerations to bear in mind when publicising their actions?

5) How effective are carbon labelling or trade marks?

6) What factors does a consumer take into account when purchasing offsets?

7) Why are businesses purchasing offsets?

According to a recent survey, 2007 was the 'Year of the Standard'. Suppliers embraced the idea of the standard as a way to demonstrate credibility and legitimacy, but many companies still find the fragmented market a complex arena. 2007 saw the emergence of several new standards, but how has the situation developed on the ground in 2008?

Over the past 2 years hundreds of organisations from a range of industries and sectors have announced initiatives to offset their emissions, go 'carbon neutral', or provide services for their consumers to do so. There now exist a growing number of case studies describing the experiences of a range of companies, how their programmes were received, key success points and barriers, and lessons learned.

Transparency of the voluntary carbon market goes hand in hand with its credibility. Once a carbon credit has been deemed 'credible' it is important to be able to track its life from creation to retirement, in order to avoid things like double counting and to prove a credit's existence. Numerous registries, platforms and other tracking mechanisms have been set up to increase the robustness of the market, and but the following questions remain:

1) Are registries & exchanges building a robust infrastructure?

2) How do they bring consumer confidence and integrity to the market?

3) Does the plethora of registries mean double counting is a problem?

4) Exploring the need for linking registries

5) Legal aspects of VERs

6) VER pricing trends

7) What factors go into VER pricing?

Finally, the latest figures signal that 2008 will see even bigger growth in the voluntary offset market. But how will this growth take shape and what does the longer term future of the market look set to hold? What are the opportunities and barriers that look to affect the market over the next few years. The key questions here are:

1) How does the market look set to develop into 2009 and beyond?

2) Where are the biggest opportunities in terms of project development?

3) How can allowances in cap-and-trade schemes be used for offsetting purposes?

4) What is the approach of governments to voluntary actors?

About the Author

James Nash is a climate scientist with Greatest Planet (www.greatestplanet.org). Greatest Planet is a non-profit environmental organization specialising in carbon offset investments. James Nash is solely responsible for the contents of this article.

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