Country Name: Germany
Author: Katherine Hamilton

The Ecosystem Marketplace's Carbon Program Manager reports on the news coming out of this year's Carbon Expo in Cologne, Germany.



Earlier this May, the World Bank released its latest State and Trends of the Carbon Market 2007 report at the Carbon Expo in Cologne, Germany. According to the report, the volume of trading in emission credits has tripled in the past year, from US$10 billion in 2005 to US$30 billion in 2006. Much of this value is linked to the $25 billion market for European Union Allowances, but the report also highlights growth in non- Kyoto markets. In the past year, the New South Wales market more than doubled in value and the Chicago Climate Exchange (CCX) leapt from a value of $3 million in 2005 to an estimated $38 million in 2006. For the first time, the report estimated the value of the voluntary carbon market outside of CCX, citing a conservative value of $100 million.

The World Bank's inclusion of the value of voluntary markets in this report is one indicator of their growing relevance to the business and development communities. Another indicator is the slew of articles in news sources such as Business Week, the New York Times and Financial Times placing voluntary offsetting in the media limelight¹. While much of this attention has been positive, recently several exposés in the mainstream and business press have shone a light on the numerous pitfalls buyers and sellers can face in the voluntary carbon markets.

On Carbon Expo's first day, discussion about transparency, additionality and legitimacy in the voluntary carbon markets was catalyzed by an opening plenary session led by Fiona Harvey. Harvey is a Financial Times journalist and the author of a recent series of articles on offsetting. Simon Petley of EnviroMarket echoed the concern of many Carbon Expo attendees that these exposés on offsets could tarnish the public perception of carbon markets in general. "I feel like we're all getting tarred by the same brush because the public doesn't see the stratifications in this market." With the carbon market family's reputation (and money) at risk, conference goers were eager to discuss means of civilizing the regulatory markets' quirky cousin, the voluntary market.

Eager to be part of the solution, the Gold Standard held a panel on their standard in a side event and Mark Kenber of the Climate Group presented on the Voluntary Carbon Standard during a session on "The Market use of Voluntary Carbon Standards." Much to the surprise of many attendees, TÜV SÜD, an established verifier in the carbon market, joined the fray by announcing their new standard for voluntary carbon credits, VER+, a new "Kyoto-lite" standard for verified emissions reductions. TÜV SÜD describes VER+, as "a robust standard for verified emissions reductions." Martin Schröder, project manager at TÜV SÜD, notes the organization saw the need for this standard after seeing "a lot of 'homemade' verified emission reductions (VERs)." This new standard's defining feature is its strong link to the Clean Development Mechanism (CDM). In contrast to most voluntary standards, which are striving to separate themselves from the CDM, Schröder describes the standards as "streamlined" with Kyoto.

In tandem with VER+, TÜV SÜD also announced BlueRegistry, "a new platform for managing verified emissions reductions and green certificates." The registry will be a transparent, internet-based system designed to accept credits from programs such as CCX or the Voluntary Carbon Standard, along with VER+ certified credits². Though numerous registries do exist in the voluntary carbon markets, there is no dominant player yet. While some attendees responded positively to the idea of having an umbrella registry, others balked at what they saw as TÜV SÜD's move to "dominate the supply chain."

Taking a step back from focusing specifically on the legitimate "birth" of a carbon offset, the World Economic Forum and International Emissions Trading Association (IETA) sponsored a Carbon Expo side event to present their efforts in "creating a generally accepted corporate climate reporting framework." Such a standard will not focus directly on offset quality or claims of carbon neutrality but is designed to facilitate transparent corporate reporting of greenhouse gas emissions as one element of corporate climate impact management. A Climate Disclosure Standards Board (CDSB) will guide the framework³. Founding CDSB members include the California Climate Action Registry, Carbon Disclosure Project, Ceres, The Climate Group, IETA, World Economic Forum Global Greenhouse Gas Register, and the World Resources Institute. The Carbon Disclosure Project will operate as the Board's Secretariat.

Whether or not these efforts can help bring transparency to the growing voluntary carbon market has yet to be seen. However, perusing the hundreds of exhibition booths at the Expo's "Trade Fair," it is clear that critics of offsetting haven't squelched corporate interest in VERs. Several big players such as Cantor CO2e, which recently launched Climate Warehouse for the voluntary market, are already knee deep in pushing voluntary offsets into the mainstream.

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¹For example:
"Carbon-Neutral Is Hip, but Is It Green?" New York Times. 29 April, 2007.
"Industry caught in carbon smokescreen." Financial Times. 25 April, 2007.
"Another Inconvenient Truth." Business Week. 23 March, 2007

²TÜV SÜD BlueRegistry press release:

³World Economic Forums

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Katherine Hamilton is Manager of Carbon Programs at the Ecosystem Marketplace. She may be reached at khamilton@ecosystemmarketplace.com.

First published: May 14, 2007

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