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Voluntary Carbon Offset Markets

Voluntary Carbon Offset Markets

Full Title: Voluntary Carbon Offset Markets
Author(s): Brad Handler and Darshil Shah
Publisher(s): Payne Institute for Public Policy Sustainable Finance Lab at Colorado School oof Mines
Publication Date: February 15, 2023
Full Text: Download Resource
Description (excerpt):

A “currency” to help fund climate mitigation: Voluntary carbon offset credits generate funds for activities that mitigate against climate change and achieve other societal benefits. Good prospects for growth in demand: Over 4,200 companies have committed to SBTi-based emissions reductions, pointing to dramatic growth in the demand for offset credits. Visibility on large scale supply additions: Countries/jurisdictions are working through protocols for very large credit issuance. This has the advantages of scale and reducing the integrity-related concern known as Leakage. Participating corporates also get to “lock in” supply at pre-agreed prices.

A turbulent 2022: The prospects for growth drew more criticism of offsets last year, on integrity, although also still philosophical, grounds. The industry continues to strengthen guardrails to address the integrity challenges, including through use of technology and setting tighter principles. An inefficient “marketplace”: Voluntary Carbon Markets (VCMs) are plagued by fragmentation and lack of transparency. An estimated ¾ of transactions were bilateral in 2021; accusations of high commissions are widespread.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

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