Voluntary Carbon Meets Big Business

EKO ECO Guest Blogger on October 1, 2009 Comment

By Caroline Ott, Intern for the Carbon and Water Programs

Last week, representatives from EcoSeucrities, ClimateBiz, and Baker and McKenzie met in New York for the launch of The Carbon Management and Offsetting Trends Survey 2009. The publicly available report surveyed corporate offset buyers for an insider's look at attitudes towards the voluntary carbon market. Sound familiar? Ecosystem Marketplace's annual report State of the Voluntary Carbon Markets, produced in partnership with New Carbon Finance, asks some of the same questions to the supply (rather than demand) side of the market. To find out if buyers and sellers are singing the same tune, we decided to compare the two reports.

Both reports set out to determine the motivations for voluntary participation in the carbon markets, and both found that companies offset primarily for goodwill. According to the buyers, the most popular motivation in 2008 was "environmental benefits," followed closely by carbon neutrality/marketing and corporate social responsibility (CSR). These results jive with suppliers' responses, which rank CSR and "public relations/branding" as the top drivers of participation.

While buyers and suppliers clearly agree on motivations, their stories about offset preferences get a bit muddy. In terms of project type, most market players agree that renewables are on the rise; suppliers, however, attribute this growth to hydropower while buyers voice a strong preference for solar projects. A whopping 92% of buyers found solar projects either desirable or highly desirable, but according to SVM, solar projects accounted for less than 0.1% of over-the-counter (OTC) transaction volume in 2008. The reverse is true for hydropower, which accounted for 32% of all OTC projects but only received a 67% desirability rating from buyers. This discrepancy tells us that "desirability" is perhaps a poor indicator of demand - it is essential to look at both sides of market activity.

After announcing these and other statistics from "The Carbon Management and Offsetting Trends Survey 2009," a panel of voluntary market experts at the New York launch slipped in a few bonus insights. Led by ClimateBiz Senior Editor Mark Gunther, the panel fielded questions surrounding one nagging theme: the future of the voluntary carbon markets.

To the surprise of many carbon market skeptics, the panelists argued that voluntary activity would remain afloat amidst a brewing regulatory storm. Here are a few reasons why: as a regulatory carbon scheme develops in the US, businesses will respond to an increasing awareness of environmental initiative. As one panelist put it, businesses and universities will need to vamp up their voluntary activity in order to attract talent. In addition to the marketing angle, panelists argued that the voluntary market would complement a compliance market by helping new market players learn the ropes. In other words, the voluntary market will continue to serve as a testing ground for the expected rush of participants entering a compliance market. If you're still not convinced, be sure to check out the two voluntary carbon reports for the latest numbers and analysis.