A first attempt to quantify the voluntary carbon market
has confirmed rapid growth in 2006 amid a push for higher standards.
The
report, compiled by New Carbon Finance and Ecosystem Marketplace, estimates that
in 2006 the voluntary carbon market was valued at around $US91 million across
its two broad segments. There were 10.3 million tonnes of emission reductions on
the Chicago Climate Exchange, the premier marketplace for voluntary carbon
trading, and 13.4 mt in direct or ‘over the counter’ (OTC) market, where
providers generate offsets and sell them direct to individuals and organisations
wanting to go ‘carbon neutral’.
At these levels, the voluntary market
remains a fraction of the $24 billion traded in the mandatory EU Emissions
Trading Scheme and the $5 billion under Kyoto’s Clean Development Mechanism
(CDM).
The report does concede however that it is likely to have
underestimated the trade in the largely unregulated, unreported OTC segment.
Trade in these non-standardised emission reduction credits is said to have risen
200 per cent last year as awareness of climate change and carbon emissions has
grown.
Prices for offsets in the OTC market covered an enormous range –
from 45 cents to $45 per tonne of CO2-equivalent reductions. The price range in
the standardised trade on the CCX ranged from just $1.50 to $5, the report
said.
Project activity in the OTC segment was dominated by three broad
types in 2006; forestry sequestration accounting for 36 per cent of all
projects, renewable energy generation, 33 per cent, and dealing with industrial
greenhouse gases, 30 per cent. The uncontrolled growth of the OTC market has
given rise to concerns around the veracity of emission reductions achieved from
projects, which come with little transparency or independent verification.
But 2006 and 2007 have also seen a rush to fill the credibility gap that
has arisen over carbon offsetting as the reputable forces in the global industry
seek to push it onto a more mature footing. There are now 15 accreditation
standards emerging or already available for use in the voluntary carbon sphere,
some backed by NGOs, some by government, the report says.
It estimates
that 68 per cent of OTC customers come from the US, 3 per cent from Canada, 28
per cent from the EU and 10 per cent from Australia. Of suppliers to the
voluntary market, around half were based in the US and about 30 per cent in the
EU.
Report summary and download