Voluntary Carbon Markets Explained

As tackling emissions becomes a key part of demonstrating Corporate Social Responsibility (CSR), Voluntary Carbon Credits (VCM) have become an established way of tackling carbon emissions. 

At CFP Energy, with 20+ years of experience and with an award-winning team, we're market leaders in the Voluntary Carbon Market. Contact our team today to discuss your options.

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Demystifying the Voluntary Carbon Market

Put simply, Voluntary Carbon Markets help companies offset their emissions. 

Facilitated by carbon credits, where each credit represents one metric tonne of CO₂ (or equivalent greenhouse gas emissions) removed from the atmosphere, VCMs enable businesses to voluntarily buy and sell carbon credits as part of their climate strategy. 

In this way, businesses can demonstrate their Environmental, Social, and Governance (ESG) credentials, as well as their alignment with climate disclosure frameworks.

Trading for a Greener Future: How Voluntary Carbon Credits Work

In practice, VCMs involve a variety of offsetting initiatives. Carbon credits traded voluntarily typically represent a range of carbon removal, reduction or avoidance strategies. 

Carbon credits that are traded in the Voluntary Carbon Market typically include:

Community-based projects

This refers to conservation projects, where depleted or endangered forests (essential in the sequestration of CO₂) are restored and preserved, ensuring the biodiversity and the protection of wildlife, as well as the forest itself. Community projects might also include cookstove initiatives, such as those regulated by the Clean Cooking Alliance (CCA), where carbon-intensive cooking systems are replaced with energy-efficient solutions.

Renewable energy schemes

These are schemes that typically comprise windfarms, hydropower or solar power. Carbon Credits that validate these schemes help companies reduce their reliance on fossil fuels that contribute to global warming, while aiding the transition to cleaner energy sources.

Waste management programmes

Waste management programmes help convert waste material into renewable sources of energy. This kind of scheme might involve landfill gas capture, where methane produced by landfill is treated and reused as a renewable energy source. Or it might feature composting, where organic waste is broken down aerobically to produce compost.

ETS vs. VCM

Carbon markets operate as both compliance schemes and voluntary programmes. Unlike VCMs, which are voluntary, the Emissions Trading System (ETS) operates as a mandatory cap and trade system. This means that key sectors, such as shipping and aviation, must purchase emissions allowances to offset their GHG emissions where direct abatement isn't possible. 

These types of projects, in contrast to VCMs, are overseen by governing bodies (such as the European Commission) that set the GHG emissions threshold for each specific industry.

One upside to VCMs is their flexibility: unlike in the ETS, companies can tailor the projects they buy into. Businesses can choose projects that align with their overall climate goals, or select them based on their location, earmarking projects located in regions where they have a market presence, or where they determine their climate impact to be most significant. 

Explore the Different Types of Carbon Credits You Can Access Here. 

How to Choose High-Quality Voluntary Carbon Credits

Direct delivery: where possible, carbon credits (particularly within the VCM) should be overseen, or partly managed, by your provider. This ensures that, where complex offsetting projects are involved, such as reforestation or wetland restoration, there is direct accountability to ensure full end-to-end delivery and ongoing progress tracking.

Additionality: within VCMs, this refers to the additional benefit that carbon credits must demonstrate. In practice, a carbon credit provider should be able to show that their emissions reductions would not have occurred without the project’s clearance. 

Co-Benefits: carbon credits should also demonstrate co-benefits. For example, a forest restoration project, in addition to restoring the forest itself, should also have indirect benefits, such as enhanced biodiversity, cleaner water, or improved access to local job opportunities.

Transparency: monitoring & reporting is another key characteristic of credible carbon credit projects. This is generally done by quantifying the greenhouse gases reduced or sequestered. However, the exact methodologies used will depend on the venture, i.e., whether it's a reforestation project, a renewable energy project, or a waste management initiative.

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Transparency Matters: Ensuring the Integrity of the Voluntary Carbon Market 

Even where carbon Credits are based on self-led projects, it's still important to seek out verification from third-party bodies. By choosing Carbon Credits that have been accredited by third-party auditors, such as Gold Standard and SCS Global Services, this adds an extra layer of assurance that the project’s emission reductions are real and accurately quantified.

Verification not only guarantees the effectiveness and tangible impact of carbon credits, but it also ensures the integrity of the entire Voluntary Carbon Market, ensuring not just environmental sustainability, but the ongoing endurance and viability of Carbon Neutral initiatives.

The Voluntary Carbon Market - A Powerful Tool for a Sustainable Future 

With a diverse range of projects to choose from, from reforestation and renewable energy to waste management, and with recognised accreditation standards, ensuring accurate monitoring and true additionality, the Voluntary Carbon Market offers businesses an ideal framework to establish sustainable practice and signal corporate responsibility.

CFP’s Commitment to Sustainability

CFP Energy is committed to accelerating the global energy transition to a low-carbon future. Providing solutions across carbon emissions, energy markets, renewable energy, certificates, biofuels, risk management, and asset optimisation, sustainability is at the core of everything we do, from project management to direct delivery.

Investing in a Sustainable Future - How We Can Help 

At CFP Energy, with over 20 years in the energy industry, we provide streamlined expertise in voluntary carbon instruments that matches our extensive market access. Our tailored service includes comprehensive carbon management solutions, including access to carbon credits.

Contact our carbon team today to discuss how we can structure your carbon strategy.