As governments and companies have increased their commitments to reducing carbon emissions, the ability to transfer emission rights has found renewed relevance. Today over 1000 global companies have signed up to science-based emissions targets and many more have pledged to reduce or offset their carbon emissions – known as the voluntary carbon market (VCM).
The Paris Agreement signed in 2015 also allows for the transfer of emission rights between countries, articulated through Article 6. Both these mechanisms have the potential to lower the overall cost of reducing emissions and increase the scale of climate ambition of companies and governments.
To date however, it has not been clear how the VCM and the Article 6 can work most effectively together. This website will publish outputs from the research and consultation process being conducted by Trove Research and UCL with support from Liebreich Associates, to help answer this question. Research will cover a range of useful topics including: the challenge of dealing with the surplus of historic credits, forecasting future demand and supply for carbon offsets, and analysing and resolving the issue of VCM – Article 6 interaction. The work is funded by the Children’s Investment Fund Foundation and will complete during Q12021.
Consultation on the Interaction between the VCM and Article 6 of the Paris Agreement
How the Voluntary Carbon Market works in the context of the Paris Agreement has been the subject of much debate, specifically whether national emission accounts should be adjusted for any transfer of carbon credits between voluntary buyers and sellers (Corresponding Adjustments). We identify four main points of contention:
These issues are being analysed and worked through in a series of consultation sessions from mid-January through February 2021. The key documents are published below:
This initial discussion document sets out a potential framework for assessing the contentious issues on the use of Corresponding Adjustments and suggests a potential solution space. These points will be debated in the forthcoming consultation process.
This report presents the most comprehensive analysis yet on the quality and quantity of credits currently available in the voluntary carbon market. The research highlights the problem of a large supply of poor quality, older credits, and proposes three ways for managing the transition to a cleaner, higher quality market.