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New Policy Paper explores the future of the voluntary carbon market

Photo by Wind Denmark / Flickr / CC BY-NC 2.0

Photo by Wind Denmark / Flickr / CC BY-NC 2.0

Since the adoption of the Paris Agreement in December 2015, the number of major companies that have put forward pledges to achieve net zero emissions has been growing significantly. The vast majority of companies pledging for neutrality seems to rely on some form of compensation of remaining emissions through offsetting. If these pledges translate into actual demand for voluntary carbon credits, the voluntary carbon market could grow to another order of magnitude. In practice, however, the voluntary carbon market is confronted with new challenges, particularly on the supply side.    

A new policy paper explores the future of the voluntary carbon market by bringing together the perspectives of the demand and the supply side. It juxtaposes new numbers of the potential demand for voluntary offsets from large GHG emitting companies with the struggle on the supply side in dealing with the changed circumstances of the Paris Agreement. The authors find that the voluntary carbon market as a whole has still not found a way to align itself with the new legal architecture of the Paris Agreement in a credible and legitimate way, it seems to be caught in between credibility and feasibility.

The growing mismatch between the hope placed in voluntary offsets by private sector companies relying on offsets to achieve their neutrality pledges and the continued quest for a common position of the voluntary carbon market is cause for concern. The authors conclude that both political support and a cohesive approach by the players in the voluntary carbon market are needed to establish feasible and credible solutions to voluntary carbon offsetting.

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