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.
This work sits alongside, and supports, other initiatives such as the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) and the Sustainable Markets Initiative (SMI).
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:
- The nature of corporate claims on the use of carbon credits
- The impact of VCM transactions on mitigation incentives
- The achievability of NDCs with and without voluntary market actions
- Practical issues on implementation Corresponding Adjustments
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:
LATEST REPORTS
The Voluntary Carbon Market and Climate Ambition (March 2021)
This is the final report summarising the consultation process convened by Trove Research on the interaction between the Voluntary Carbon Market and national commitments under the Paris Agreement. The report follows the publication of an initial consultation document in December 2020, and three consultation workshops in Jan and Feb 2021. The document summarises opinions, analysis and provides suggestions for future work.
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Discussion paper on the use of Corresponding Adjustments for voluntary carbon credit transfers (Jan 2021)
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.
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The Global Voluntary Carbon Market – Dealing With the Problem of Historic Credits (Updated Jan 2021)
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.
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High Ambition Markets Accelerator – HAMA (Dec 2021)
This report summarises the outcome of two global workshops held on December 9th and 10th 2020 with Civil Society and Corporate actors. The aim of the workshops was to understand whether a “High Ambition Demand Accelerator” initiative could fill the gap in driving high corporate ambition in the context of Net Zero commitments. The workshops helped form a subsequent project, the “High Ambition Demand Accelerator” supported by BEIS and the Children’s Investment Fund Foundation.
