A V-Carbon Update: Dancing with Development

Molly Peters-Stanley on August 27, 2010 Comment

The below entry originally appeared in Ecosystem Marketplace's August V-Carbon newsletter. Click here to read the full newsletter. Also, visit this page to subscribe to V-Carbon, or to read or subscribe to our full suite of newsletters covering payments for ecosystem systems.

After a slow summer, the voluntary carbon market is picking up its step to waltz into fall - this month seeing some unlikely partners, new methodologies and market mechanisms stepping onto the floor.

It's clear from recent reports that the Voluntary Carbon Standard's (VCS) dance card is full. VCS is in the spotlight again, this time for approving its first methodology for reducing emissions from deforestation and forest degradation (REDD). This is a milestone for VCS, as the first of many REDD methodologies in its pipeline to pass through the double-approval process.

Ecosystem Marketplace caught up with methodology developer InfiniteEARTH's CEO Todd Lemons, who said of their recent accomplishment, "The successful double validation of this methodology gives the world a tool that allows us to shift into action - before it's too late."

InfiniteEARTH, with funding from Shell Canada, Gazprom and others, aims to develop the world's first VCS certified REDD project in Borneo, Indonesia.The voluntary market's potential benefits to developing countries were also noted in a recent article comparing the verification costs for projects developed for the voluntary market vs. the Kyoto markets.

The article offers an anecdotal cost/benefit comparison of the Nepalese government's €150,000 outlay for UN scheme verification through Det Norske Veritas (DNV), versus a similar World Wildlife Fund (WWF) project through Swiss myclimate priced much lower and developed for voluntary buyers.

DNV spokesperson Stein Jensen admits that "for small projects the transaction costs are high." In an attempt to combat this kind of market barrier for small projects on the voluntary market, the Climate Action Reserve (CAR) will this month take to its board proposed new rules/guidelines for aggregating small (less than 5,000 acres) forest carbon projects.

Perhaps as a result of this kind of market adaptation and favorable cost/benefit discussion (tell us what you think in our sidebar survey), some players are choreographing innovative approaches for engaging developing countries in voluntary market projects. See Shift2Neutral's latest venture in the Congo, African Comesa's new project funding mechanism and the Japanese government's push for technology transfer to developing countries through pilot carbon offset projects.

On the flip side, it's a possibility in any dance that someone might step on your toes. This month, IntercontinentalExchange (ICE) gaves recently acquired Chicago Climate Exchange (CCX) employees the cold shoulder - the company fears CCX may be a "loss making" endeavor. 80% of V-Carbon readers, too, felt that CCX was no longer necessary or bound for phase-out. See our sidebar for reader survey results and keep reading for more on this and other market developments.