Stephen presentation on Voluntary carbon market

Voluntary Carbon Market Stephen Garnett School for Environmental Research Charles Darwin University Darwin Northern Territory Australia

Voluntary Carbon Market
Different types of carbon market
What is the voluntary market
Features of the voluntary market
Voluntary carbon market products
Standards and validation
Buyers and sellers
Price trends
Benefits, costs and future of the market

Different types of carbon market
Regulated emissions trading schemes (ETS) – also called cap-and-trade systems
European Union ETS
Kyoto compliance: Clean Development Mechanism (CDM), Joint Implementation (JI) under the United Nations Framework Convention on Climate Change
Others projected (e.g. Australia)
Voluntary schemes – beyond formal regulation

Size of total carbon market

What is the voluntary market
The seller undertakes actions that will result in less greenhouse gas being emitted to the atmosphere (CO 2 , methane, nitrous oxide etc.)
The vendor quantifies and verifies the amount of CO 2 equivalents to be saved. Verification is often by a third party
The buyer purchases the CO 2 equivalents, usually to offset emissions and become carbon neutral
All players act voluntarily, but the final contract is usually binding

Features of the voluntary market
Innovative and experimental
Diverse
Products
Security
Price
Sometimes difficult to verify or wilfully dishonest

Voluntary carbon market products
Renewable energy (wind farms, hydropower, solar)
Methane capture from landfills
Forestry
Energy efficiency/fuel switching

Top-rated:
Gold standard: Renewable energy and energy efficiency projects with sustainable development benefits
Started by World Wide Fund for Nature, South South North and HELIO International
Choice of offsets makes them easy to validate
Prices high but hard to track down. Vendor prices in Feb 2009 were:
planetair.ca - $42/tonne
myclimate.org - $31/tonne
climatefriendly.com - $29/tonne

Second tier:
California Climate Change registry/Climate registry (US projects only): high level validation.
Started by California State Government at request of business
Has strong validation techniques for Cement, Forest Sector, Local Government or Power/Utility
About $8.20/tonne CO 2 equivalents in February 2009.

Second tier.
Voluntary Carbon Standard (VCS) dealing in Voluntary Carbon Units (VCU)
Started by the Climate Group, the International Emissions Trading Association and the World Economic Forum, World Business Council for Sustainable Development
Accepts accreditation by United Nations Framework Convention on Climate Change and California Climate Change registry
Price February 2009 of about $6.20/tonne CO 2 equivalents

Third tier.
Chicago Carbon Exchange
Started by Dr. Richard L. Sandor who remains CEO
Has products for all six greenhouse gases, including soil carbon
Validation for legally binding compliance regime by the US Financial Industry Regulatory Authority
Price February 2009 of about $1.70/tonne CO 2 equivalents

Price trends
Formal market has collapsed – at least temporarily. Allowance used as source of quick credit plus some European countries recently released free allowances

Price trends
Voluntary market has also declined – though top end products like Gold Standard remain at 2007 prices

Performance Voluntary Carbon Index of all products has usually outcompeted CCX

Benefits, costs and future of the market
Benefits – distributes wealth to less polluting industries and countries
Costs – does not reduce greenhouse gas emissions – may even increase them if distributed money invested in greenhouse gas producing activities
Future – buoyant as economies recover since climate will continue to change and drastic change will be needed

Action in Vietnam
Voluntary Carbon Market workshop held in Hanoi 2008.
It helped ICRAF share initial concepts and discuss future collaboration with companies trading carbon in a voluntary market.
Should help next phase of RUPES project in Vietnam, particularly in Bac Kan province
Also Like Minded Donor Group (LMDG) planned to produce a Voluntary Carbon Markets Action Plan in October 2008
Potential reasonably high if validation reliable
Renewable energy and fuel changes offer highest premiums through Gold Standard if combined with social benefits

Potential in Vietnam
Potential reasonably high if validation reliable
Renewable energy and fuel changes offer highest premiums through Gold Standard if combined with social benefits
Forestry and lower value activities also possible but need strong and reliable validation

Stephen presentation on Voluntary carbon market

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