Sliced: Witnessing Progress in the Voluntary Carbon Market
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Last week, the US Federal Government released new high-integrity voluntary carbon market (VCM) principles. This news has been extensively covered, so we won’t spend time discussing it here. However, if you missed the announcement or want to orient yourself, you can find comprehensive coverage from the White House, Quantum Commodity Intelligence, CarbonCredits.com, and the New York Times.
The topic for today is progress.
It’s important to take a moment to reflect on the remarkable strides made in improving the VCM over the past year.
Alongside the White House’s announcement, the Integrity Council for the Voluntary Carbon Market (ICVCM) introduced its Core Carbon Principles (CCPs) to help set a high global benchmark for carbon markets. Then the ICVCM began program and category-level assessments on standards and methodologies, respectively. Some standards have already been deemed CCP-eligible.
The Voluntary Carbon Markets Integrity Initiative (VCMI) announced its Claims Code of Practice to help accelerate corporate engagement with the VCM as part of legitimate net-zero pathways. Afterward, Bain & Company made the inaugural VCMI Carbon Integrity Claim.
The Science Based Targets Initiative (SBTi) Board of Trustees issued a statement indicating that net-zero committed businesses might potentially be allowed to use carbon credits to address Scope 3 emissions. The outcome of this controversial announcement is expected in June or July.
Another federal entity, the United States Commodity Futures Trading Commission (CFTC) stepped into the game with proposed guidance on listing voluntary carbon credit derivative contracts.
California implemented a few new laws around emissions disclosures and carbon credit usage by companies that do business in the state, with the aim of improving transparency.
During COP28 in November 2023, major standards including the American Carbon Registry (ACR), Architecture for REDD+ Transactions (ART), Climate Action Reserve (CAR), Global Carbon Council (GCC), Gold Standard (GS), and Verra’s Verified Carbon Standard (VCS) announced they will work together to enhance market integrity, targeting substantial improvements by 2024. Since then, Verra and others have been actively modernizing methodologies to keep pace with evolving needs.
In a collaborative effort, Singapore revealed a partnership with Verra and GS to develop a playbook for carbon crediting under the Paris Agreement to streamline and enhance crediting processes.
On the corporate front, tech giants Google, Meta, Microsoft, and Salesforce recently pledged to contract up to 20 million tonnes of high-quality nature-based carbon removal credits by 2030. In addition, Microsoft and Ørsted inked one of the world’s largest carbon removal deals.
That is a lot of action and it’s only just a snapshot.
Why is it happening?
It would be hard to find a single person involved in the VCM who would claim that the market is in perfect form and doesn’t need improvement. There is widespread recognition that the system requires positive evolution. We are witnessing a massive, collective effort to achieve this.
Actions such as forming coalitions, offering principles, best practices, and guidance to credit suppliers and buyers, passing regulations and laws, and committing to massive credit purchases, are screaming a global commitment to elevate the level and transparency of the VCM. This truly multi-faceted approach is trying to ensure that every aspect of the market, from verification processes to corporate accountability, is scrutinized and refined.
The objective?
The goal is a more robust and trustworthy carbon market that delivers on its promises of greenhouse gas emissions avoidance, reductions, and removals while providing climate finance to those who need it most. By pooling resources, knowledge, and expertise, all these stakeholders are helping build a stronger foundation for a market that meets environmental needs. This stance is invaluable for the VCM’s evolution because we need a healthy VCM as a tool in the global fight against climate change. The past twelve months have shown tremendous growth in the voluntary carbon market. As market participants continue to push for higher standards and greater integrity, the future of VCM is looking brighter with each passing month. There is still plenty of work to be done but what we’re experiencing is one thing – progress
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