There's an event in New York this coming week called the Carbon Finance & Investment Summit which I'll visit and on which I'll report. I talked about the carbon market, and others, in the post from April 19, Markets. I then mentioned an event in Cologne, Carbon Expo, that took place at the beginning of May. We have the good fortune to have a report from Cologne from Kate Hamilton, Head of Carbon Programs at the Ecosystem Marketplace, originally posted at their website. Thanks to Kate and Ecosystem Marketplace for sharing their considerable insight into the state of the carbon markets.
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COLOGNE – Earlier this month, the World Bank Carbon Finance Unit (CFU) released its latest "State and Trends of the Carbon Market 2007" report at the Carbon Expo in Cologne, Germany. According to the report, the volume of trading in emission credits has tripled in the past year, from US$10 billion in 2005 to US$30 billion in 2006. Much of this value is linked to the $25 billion market for European Union Allowances, but the report also highlighted growth in non-Kyoto markets. In the past year, the New South Wales market more than doubled in value and the Chicago Climate Exchange (CCX) leapt from a value of $3 million in 2005 to an estimated $38 million in 2006. For the first time, the report estimated the value of the voluntary carbon market outside of CCX, citing a conservative value of $100 million.
Not all reports on the voluntary carbon markets have come in the form of praise. A slew of recent articles in the mainstream and business press have questioned the integrity of voluntary carbon offsets. Simon Petley of EnviroMarket echoed the concern of many Carbon Expo attendees that these exposes on offsets could tarnish the public perception of carbon markets in general. "I feel like we're all getting tarred by the same brush because the public doesn't see the stratifications in this market." With the carbon market family's reputation (and money) at risk, conference goers were eager to discuss means of civilizing the regulatory markets' quirky cousin, the voluntary market.
Eager to be part of the solution, the Gold Standard held a panel on their standard in a side event and Mark Kenber presented on the Voluntary Carbon Standard during a session on "The Market use of Voluntary Carbon Standards." Much to the surprise of many attendees, Tuev Sued, an established verifier in the carbon market, joined the fray by announcing their new standard for voluntary carbon credits, VER+, a new "Kyoto-lite" standard for verified emissions reductions. Tuev Sued describes VER+, as "a robust standard for verified emissions reductions." Martin Schroeder, project manager at Tuev Sued, notes the organization saw the need for this standard after seeing "a lot of "homemade' verified emission reductions (VERs)." This new standard's defining feature is its strong link to the Clean Development Mechanism (CDM). In contrast, most voluntary standards, which are striving to separate themselves from the CDM, Schroeder describes the standards as "streamlined" with Kyoto.
In tandem with VER+, Tuev Sued also announced BlueRegistry, "a new platform for managing verified emissions reductions and green certificates." The registry will be a transparent, internet-based system designed to accept credits from programs such as CCX or the Voluntary Carbon Standard, along with VER+ certified credits.
Taking a step back from focusing specifically on the legitimate "birth" of a carbon offset, the World Economic Forum and International Emissions Trading Association (IETA) sponsored a side event at the Carbon Expo to present their efforts in "creating a generally accepted corporate climate reporting framework." Such a standard will not focus directly on offset quality or claims of carbon neutrality but is designed to facilitate transparent corporate reporting of greenhouse gas emissions as one element of corporate climate impact management.
A Climate Disclosure Standards Board (CDSB) will guide the framework. Founding CDSB members include the California Climate Action Registry, Carbon Disclosure Project, Ceres, The Climate Group, IETA, World Economic Forum Global Greenhouse Gas Register, and the World Resources Institute. (See this release from the WEF.) The Carbon Disclosure Project will operate as the Board's Secretariat.
Whether or not these efforts can help bring transparency to the growing voluntary carbon market has yet to be seen, but it is clear that 2007 promises to be interesting for those looking to take VERs mainstream.