Voluntary Buyers Spend Nearly $4.5 Billion on Offsets to Combat Climate Impacts
Companies, governments, and individuals voluntarily spent just under $4.5 billion on conservation and clean energy over the past decade by purchasing nearly 1 billion carbon offsets, finds a new report released on the sidelines of this week’s international climate talks in Bonn, Germany.
The Forest Trends Ecosystem Marketplace report, Ahead of the Curve: State of the Voluntary Carbon Markets 2015
demonstrates that voluntary demand for carbon offsets – each
representing a one-tonne reduction in greenhouse gases that compensates
for emissions elsewhere – is impactful well beyond the markets’
relatively small size.
The voluntary markets have served as the testing ground for
compliance carbon pricing programs all over the globe. South Africa, for
example, will allow offsets generated under two well-known voluntary
carbon market standards when the country implements its carbon tax in
2016. The forestry, ozone-depleting substances, and coal and livestock
methane offset projects now eligible for California’s carbon
cap-and-trade program have their roots in the voluntary markets.
The pricing of voluntary carbon offsets has experienced peaks and
valleys over the last decade. The global average price peaked at
$7.3/tonne in 2008 as momentum appeared to be building toward the United
States implementing a national cap-and-trade system to reduce these
emissions. But prices generally began to decline as carbon trading
legislation faltered in the U.S. Senate and nations failed to ratify
another phase of the Kyoto Protocol, eventually reaching an all-time low
of $3.8/tonne in 2014.
Voluntary carbon offsetting can take on various forms, including
saving endangered rainforest, distributing clean-burning cookstoves in
developing countries, installing renewable energy systems, restoring
mangroves and cultivating low-carbon rice production. From year to year,
the project type most in demand has changed, driven by policy signals
and supply-demand fundamentals, according to Ecosystem Marketplace,
which has tracked these activities since 2007. Wind projects topped the
charts in 2011 and 2012 due to their relative cost-effectiveness
compared to other project types, but have since been overtaken by
avoided deforestation (REDD) offsets, which traded an all-time high of
25 million tonnes in 2014.
A few countries expected to play critical roles in the international
climate talks have received the largest sums of voluntary financing of
carbon offset projects, according to the report. Over the last decade,
the United States experienced the largest volume of voluntary offset
transactions (136 million tonnes of offsets valued at nearly $700
million), followed by Brazil (40 million tonnes valued at $233 million).
The role of the voluntary carbon markets is inextricably linked to
the global climate talks as the up and down cycles these markets have
experienced over the past decade have been driven in large part by
policy signals – or the lack there of. But the progressive actions of
voluntary buyers can also inform and shape the international
negotiations, as they have at the national and subnational levels, the
Ecosystem Marketplace report demonstrates.
to read the report.
Tags: Renewable Energies | Consumer
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