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Global businesses are showing growing support for a new voluntary carbon offset standard, as world leaders have yet to secure a post-2012 agreement to extend the UN’s regulated carbon market, advocates for the voluntary standard say. The Voluntary Carbon Standard (VCS), which was launched last year, allows investors in developing country projects – aimed at curbing greenhouse gas emissions – to get carbon credits outside of the UN’s regulated clean development mechanism CDM.
The carbon emission offset market regulated by the UN Framework Convention on Climate Change was created to help countries comply with binding emissions reduction targets under the Kyoto protocol, which runs from 2008 through 2012. However, world governments under the auspices of the UNFCCC are still negotiating a post-2012 agreement, and may not conclude until late 2009, when government negotiators are expected to meet at UN climate talks in Copenhagen.
Uncertainty about a post-2012 agreement, coupled with limitations of the UN’s clean development mechanism (CDM) market have helped to fuel growth in the voluntary offset market. “With the discussion on a post 2012 climate architecture starting in full, governments are seeking to find common grounds on the ways of reducing emission globally,” Rick Samans of the World Economic Forum said in a statement. “The Voluntary Carbon Standard can be a valuable tool in gaining essential experience in new (greenhouse gas) programmes and technologies, currently not covered by the regulated market,” he said.
Analysts reckon annual turnover in the voluntary carbon market could reach $4 billion in the next five years, particularly as demand picks up from the US – the only major industrialised country that has not ratified the Kyoto protocol. Last year, a study by Ecosystems Marketplace and New Carbon Finance found that 68 per cent of the 27 million voluntary carbon credits (VERs) that traded in 2006 were bought by US companies. Analysts predict the size of the global voluntary market could reach 350-400 million credits in 2012. Still, the market is small compared with the CDM market.
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