In partnership with UNEP

Voluntary carbon markets almost tripled in size

8 May 2008 | Luca Del Buono |

At least 65 million tonnes of carbon credits were transacted in 2007, a 165% increase over 2006 and a nearly 200% increase for the over-the-counter market only, with a total market value of $331 million according to a study conducted by the Ecosystem Marketplace and New Carbon Finance, set for release at Carbon Expo on May 8, 2007.

Ecosystem Marketplace, a leading information portal on environmental markets and payment for ecosystem services transaction, and New Carbon Finance, a leading provider of information, analysis, and insights into the North American, European, and Kyoto carbon markets, have completed the second edition of their widely-cited "State of the Voluntary Carbon Markets".

Subtitled "Forging the Frontier" to highlight the emergence of more than twenty independent standards for verifying and validating voluntary offsets, the report has been compiled from 150 suppliers of carbon offsets, as well as registries and brokers.

The report is freely available at http://www.ecosystemmarketplace.com and www.newcarbonfinance.com <http://www.newcarbonfinance.com> from Thursday, May 8, 2008, and was made possible with funding from top sponsors MGM International, EcoSecurities, Evolution Markets, APX Inc., as well as sponsors Blue Source, Baker

McKenzie, Cantor CO2e, Sterling Planet, TÜV SÜD, and Equator Environmental.

This year's survey identified several key trends in the voluntary carbon markets. Among the highlights:

  • The average price paid to offset one tonne of CO2 or equivalent greenhouse gases rose 49% from 2006 to 2007, from $4.10/t to $6.10/t. Prices ranged rom as a low as $1.80/t to as high as $300/t.
  • Volume in the over-the-counter (OTC) market nearly tripled in 2007, to 42 million tonnes of carbon credits. Combined with the 23 million tonnes transacted in the CCX in 2007, a confirmed total volume of 65 million tonnes was transacted in the voluntary carbon market in 2007.
  • Ecosystem Marketplace and New Carbon Finance valued the international OTC market at $258 million in 2007. Together with the CCX, which was valued at $72 million, the global voluntary market was worth a total of $331 million in 2007. This more than triples the 2006 market value of $97 million.
  • In the OTC market, energy efficiency, renewable energy, methane destruction, and forestry/land based projects were the most dominant project types in 2007.
  • The percentage of projects sourced from Asia nearly doubled, from 22% in 2006 to 39% in 2007, while the percentage of projects sourced in Africa actually declined both in market share (6% to 2%) and – more disturbingly – in absolute terms.
  • Buyers of voluntary credits tend to purchase offsets that most closely resemble those of the compliance market rather than indulge in the sort of experimentation and innovation that many believe the markets offer.

"We're seeing significant growth, almost tripling in volume, as well as signs of maturation in the market, such as standards and registries," explained Katherine Hamilton, an author of the report and Associate Director at Ecosystem Marketplace.

"According to our estimates, the market value has even grown stronger than absolute volumes as buyers are willing to pay more for their offsets. Relative to 2006 the market value has grown by 240%, which is significantly higher than even the regulated markets," noted Milo Sjardin, Head of North American Operations at New Carbon Finance.

About the Voluntary Carbon Market:

Environmentally-aware companies have been funding clean development projects to offset their CO2 emissions for two decades, and until the Kyoto Protocol came into force, such transactions were entered into voluntarily, rather than to comply with emerging mandatory cap-and-trade schemes. Since the advent of the Kyoto Protocol, the voluntary niche has served as testing ground for new technologies and methodologies.

About Ecosystem Marketplace:

Ecosystem Marketplace, a project of the non-profit Forest Trends, is a leading source of information on environmental markets and payment schemes for ecosystem services. In particular, we are interested in market-based approaches to the conservation of water-related ecosystem services, carbon sequestration, and the myriad benefits of biodiversity. Our publicly available information sources include annual reports, quantitative market tracking, weekly articles, daily news, and newsletters designed for different payments for environmental services stakeholders.

About New Carbon Finance:

New Carbon Finance is the leading provider of information, analysis and insights into the North American, European and global carbon markets. New Carbon Finance constantly strives to provide the most accurate projections of future carbon market prices using proprietary fundamental analysis and models. The research underlying this report provides a crucial quantitative platform that will substantially enhance the understanding of the fast moving voluntary carbon market.

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