This article was originally published in the V-Carbon newsletter. Click here to read the original.
28 May 2014 | Voluntary buyers were driven to purchase carbon offsets for many reasons in 2013, but at the top of the list was a desire to combat climate change. Corporate social responsibility and leadership also remained prominent motivations, according to early findings from Forest Trends’ Ecosystem Marketplace’s State of the Voluntary Carbon Markets 2014 report, the executive summary of which was unveiled today at Carbon Expo in Cologne, Germany. This year’s launch event is sponsored by ClimateCare, EcoAct and Santiago Climate Exchange.
Voluntary demand for carbon offsetting declined 26% in 2013, with buyers transacting 76 million tonnes (MtCO2e) of greenhouse gas (GHG) emissions, according to the annual report. At first blush that may seem like a steep drop, but it reflects in part the fact that carbon offsets previously captured in Ecosystem Marketplace’s voluntary survey under the pre-compliance category are no longer featured in the data. With California launching its cap-and-trade program in January 2013, millions of tonnes generated by forestry, livestock and US ozone-depleting substances projects migrated into the compliance market. In addition, enthusiasm for pre-compliance activity in Australia dwindled last year amid the new federal government’s aggressive efforts to repeal the country’s carbon tax. Overall, pre-compliance declined to an all-time low on the list of primary motivations for voluntary offset buying.
That’s not to say the voluntary market is not facing many challenges. Buyers paid a total of $379 million for carbon offsets last year, a 29% decline compared to the previous year, with a sizeable decline in the average price to $4.9 per tonne of carbon dioxide equivalent (tCO2e), amid an overall drop in demand.
The affection that voluntary buyers have for forest carbon projects continues to grow, in large part because of the very attractive co-benefits of these projects. The Ecosystem Marketplace report shows REDD (Reduced Emissions from Deforestation or Degradation of forests) and avoided conversion projects firmly in the lead, with a 38% share of the voluntary carbon market, displacing perennial chart-topper renewable energy. But REDD prices did suffer amid an oversupply in the market, the lack of a firm signal of acceptance from a compliance market and competition from other, less expensive project types. The average price for REDD/avoided conversion offsets dropped 44% to $4.2 tCO2e, a price decline that would have been even sharper had it not been for a major transaction of about 8 MtCO2e between the Brazilian state of Acre and the German government that featured emission reductions priced at $5/tCO2e.
Ecosystem Marketplace will continue to publish a series of interviews with key participants in the voluntary carbon markets conducted as part of the research for this year’s State of report. We’ve already highlighted how Chevrolet is driving in the voluntary carbon market’s fast lane, why CarbonFund.org is hoping California’s carbon program steps up to the plate to accept REDD offsets, how the BioCarbon Group is investing in projects for both the voluntary and compliance markets and how Environmental Credit Corp is developing a new charismatic project type that could be added to California’s program in the future.
Save the date for Forest Trends’ Ecosystem Marketplace’s State of the Voluntary Carbon Markets 2014 full report launch event on June 24 in Washington, DC from 4:30 – 6:00 PM EDT. Look for more information including registration and webinar details soon.
These and other stories from the voluntary carbon marketplace are summarized below, so keep reading!
Every year, Ecosystem Marketplace relies wholly on offset market participants to financially support the State of research. In return, sponsors ($7.5k+) and supporters ($3k) benefit from the report’s growing exposure, early insight into our findings, and opportunities to engage directly with Ecosystem Marketplace in report-related outreach and events. Interested organizations should contact Molly Peters-Stanley.email@example.com
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