Voluntary carbon markets: Carbon credits, Offset Standards,.. | Explainer from a business consultant
Kate Bakal Kate Bakal
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 Published On May 6, 2021

#voluntarycarbonmarkets #carboncredits #howtosellcarbonoffsets

In 1989, the American electric power production firm AES Corp decided to finance an agri-forest project in Guatemala, investing two million dollars. The goal of the project was to offset the emissions of a new power plant the group had built in Connecticut by planting 50 million trees. This project became the first documented carbon offset program and it marked the beginning of Voluntary carbon markets.

Why does it help to address climate change? Since we only have one atmosphere, it does not matter where the emissions are released, because they will soon spread around the earth, creating a greenhouse effect. Following the same logic - it also doesn’t matter where we reduce emissions. Therefore, the reduction of a ton of CO2, no matter where or how it is done, results in the same climate benefit.

The unit traded on Voluntary Carbon Markets is carbon credit. Which is a tradable certificate representing 1 ton of CO2 equivalent removed from the atmosphere, by a project designed specifically for this purpose.

Voluntary carbon market does not have a single regulatory body and is highly fragmented. Which means there are many agencies with somewhat different standards that can verify the project. And standards are important cause carbon offsets may be of high quality, but may also be of low quality.

This scattered pattern of standards and lack of proper regulation is a reason why voluntary markets get criticized and partially this is fair. But it's also worth mentioning that these days voluntary carbon markets became much more mature. Standards are getting better, the process of purchasing carbon offsets is getting easier and more accessible. And, moreover, learnings that came from voluntary markets became super valuable to build the second type of Carbon markets - compliance or regulatory ones.

0:00 Intro & questions to be covered
0:33 First carbon offset project
1:29 Definition of Voluntary Carbon Markets
1:45 Why does it help to address climate change?
3:27 What is traded on Voluntary carbon markets? (definitions of carbon credit and carbon offset)
4:31 How do carbon credits occur on Voluntary Carbon Markets?
5:45 Examples of the biggest VCM standards programs
8:40 Executive summary

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