8 May 2024
VCM
The Voluntary Carbon Market (VCM) enables businesses, governments, and individuals to purchase carbon credits to offset their emissions. Carbon credits can be seen as a company’s voluntary tax on their emissions, channelling funding into projects that reduce or remove carbon from the atmosphere.
Companies around the world are under growing pressure to reduce their carbon footprint. After lowering emissions, purchasing high-quality carbon credits to offset remaining emissions is an essential strategy for businesses to make a significant contribution to sustainability.
Projects that reduce or remove carbon generate carbon credits. Each credit represents one metric tonne of CO2e.
The emission reductions and removals are verified by a third-party then registered through standards like Verra or the Gold Standard.
Once registered, these carbon credits can be sold directly to an end buyer or to an intermediary who will trade them into the secondary market.
Project developers can fund their activities that reduce or remove CO2e with the revenue generated from selling carbon credits.
Create and manage projects that generate credits
Certification, verification and standardisation to ensure project credibility
Companiesor individuals seeking to compensate for their emissions
Facilitate the buying and selling of carbon credits
The market is projected to grow as more entities commit to net-zero targets and as international cooperation on climate action intensifies. However, ongoing improvements in transparency, standardisation, and verification are crucial to its long-term efficacy and credibility.
The approval of Article 6 of the Paris Agreement at COP29 in Baku, marks a historic moment for global climate action. Article 6 introduces market-based mechanisms that enable countries to transfer emissions mitigations internationally to meet climate targets. After nine years of negotiations, nations have finalised the frameworks for its two main components, Article 6.2 and 6.4, fully enabling their implementation.
The UK’s newly released Principles for Voluntary Carbon and Nature Market Integrity represent a significant step forward in leveraging voluntary carbon markets (VCMs) to lower global emissions, attract climate finance, and restore nature. These principles reflect a growing international trend toward creating structured, transparent standards for market participation.
As the aviation industry navigates the first year of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Phase 1 (2024–2026), this week’s approvals of additional carbon crediting standards have influenced the market landscape, introducing both opportunities and complexities.