Full Title: Demystifying the Voluntary Carbon Market
Author(s): Erin Shortell and Chris Holt
Publisher(s): Institute for Policy Integrity - New York University School of Law
Publication Date: February 12, 2025
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Description (excerpt):
Companies often seek to “offset” their greenhouse gas emissions to meet their climate mitigation goals by voluntarily purchasing carbon credits from other entities. Ideally, a buyer’s purchase of carbon credits ensures that another entity has generated, or will generate, emissions reductions or removals that the buyer can claim to counteract its own emissions. While the voluntary carbon market has received significant attention in recent years, discussions of the market tend to reveal inconsistency, ambiguity, and confusion. In part because there is no unified market platform or clearinghouse for information, many observers must cobble together, reconcile, and integrate information from disparate sources to understand the voluntary carbon market.
This report draws on those disparate sources to offer an overview of how the voluntary carbon market works, clarifying both details and terminology. The goal is to provide a resource for the public, policymakers, and other stakeholders to understand the key terms and concepts at issue in debates over the voluntary carbon market. This report is not intended to endorse or criticize the voluntary carbon market, but rather to provide an important foundation for the development of policy recommendations.
Part I explains what carbon credits are and how the voluntary carbon market differs from other types of carbon markets. Part II introduces the key market participants and explains their roles in the voluntary carbon market. Part III distinguishes among the most common types of transactions in the voluntary carbon market. Finally, Part IV discusses the main problems that can affect the integrity of carbon credits.