EM Readers See Gourmet Demand
The results are in, and our year-end voluntary carbon survey shows that readers expect two complementary trends to continue in 2012. On the demand side, they see buyers clamoring for more non-carbon benefits. On the supply side, they see more standardization in the carbon component, which should make the co-benefits even more transparent.
And Standardized Supply In 2012
This article was originally published in the V-Carbon newsletter. Click here to read the original.
15 January 2013 |
Ecosystem Marketplace is ringing in the new year with this retrospective edition of V-Carbon News
. One year ago, our New Year edition
took you back to the top stories of 2011 and your predictions for the year ahead. As predicted, in 2012 we witnessed a reorientation of the voluntary carbon markets toward domestic, pre-compliance, and fragmented national initiatives.
Readers reflected these trends in their survey-based ranking of the top stories from 2012 – including stories of scale, consolidation, fraud, corporate uptake and country-level progress. The same readers offered their predictions for the current year, all of which are published below to offer our readers a glimpse of markets present and future.
In 2013, our expert readers tell us to expect a continued emphasis on carbon projects' social and other "non-carbon" co-benefits; a continued move (on the supply side, anyway) toward standardized and jurisdictional approaches; and increased pre-compliance activity in emerging compliance markets. Check out the ranking below and read some insightful predictions from a few movers, shakers – and V-Carbon News readers like you!
While you’re reading, know that you and thousands of other readers made 2012 the best year yet for Ecosystem Marketplace and V-Carbon News readership! We look forward to again providing reliable and transparent information in the new year, thanks in part to those organizations that support our research.
Most recently, this includes the Verified Carbon Standard, BioCarbon Group Pte. and the Santiago Climate Exchange, which recently joined other donors to make our 2013 State of the Voluntary Carbon Markets report a possibility. We’re now 15 donors away (at the $3K level) from being able to publish again in 2013 – can we count on your support? Email Molly Peters-Stanley to inquire.
Best wishes for a lower carbon diet in 2013, from all of us here at Forest Trends' Ecosystem Marketplace!
Reader Retrospective 2012
A reader-ranked summary of the year’s top stories impacting the voluntary carbon market
10. Scaling the Great Wall: Developing countries sought new demand for domestic carbon offsets as the European Union limited post-2012 eligibility of CERs into the EU Emissions Trading Scheme to least-developed countries. A top development was China’s new bridge for China-based CDM Projects as China voluntary carbon credits (CCERs) eligible under the country’s new pilot carbon trading schemes, which applied for government approval to host CCER trades.
9. Watershed moments for land use: The AFOLU landscape got its feet wet this past year as both the ACR and VCS rolled out methodologies for wetland restoration. ACR approved the world’s first methodology for deltaic wetland restoration, while VCS released the first requirements for crediting restoration and conservation across wetland ecosystems.
8. Emergency response: This past year, regulators and market participants increasingly acknowledged private sector engagement as crucial to financing and scaling up REDD. Wildlife Works launched the Code REDD campaign to build corporate demand for high-quality REDD projects in the voluntary carbon market while helping engage policymakers in supporting jurisdictional nested REDD.
7. BlueNext bids farewell: BlueNext, a Paris-based carbon exchange jointly owned by NYSE Euronext and France’s Caisse des Depots et Consignations, wound down in December after failing to win a bid to run Phase III EU ETS auctions starting 2013. The exchange’s exit leaves the market to the Intercontinental Exchange, alongside platforms run by CME Group, Nasdaq OMX Group, and the European Energy Exchange.
6. Growing pains: As the voluntary carbon markets continued to see the rise of fraudulent carbon credit scams this past year, the UK’s Financial Services warned individual investors of such scams, which often feature aggressive cold-calling tactics and SIP approval stamps on their websites. Four boiler rooms shut down after an investigation by the UK’s Insolvency Service.
5. Inside Microsoft: Microsoft set an internal price for carbon as part of its effort to be carbon neutral and incentivize individual company units to reduce emissions as much as possible, basing its price on the cost of buying offsets and the price of investing in renewable energy. The price is intended to apply to electricity usage and company flights in all corporate operations across 100 countries.
4. Australia goes country: Australia made its way to the start line for its carbon price mechanism via its Carbon Farming Initiative offset program, which established program methodologies and secured a $250 million pledge from the Australian government to purchase non-Kyoto voluntary CFIs – and jump start their domestic market – in a year’s time.
3. Suppressed demand finds delayed gratification: Suppressed demand methodologies generated their first large-scale issuance. Vestergaard Frandsen’s Lifestraw Carbon for Water program earned 1.4M credits to finance the delivery of water purification devices under the Gold Standard, while Michigan-based water filter manufacturer Triple Quest began pursuing Gold Standard validation.
2. Gold Standard gets fair fix: The Gold Standard acquired the CarbonFix standard to integrate into a (literally) greener Gold Standard version 3.0, with the former expanding beyond its traditional focus on energy-efficient technology offset projects to incorporate the CarbonFix’s expertise on tree-planting. The GS also announced new alliances with its sibling the Forest Stewardship Council and Fairtrade.
1. Carbon rising: You voted the rise of jurisdictional nested REDD (JNR) as the biggest development of the voluntary carbon markets this past year, with both VCS and ACR releasing JNR methodologies to help jurisdictions scale up emissions reductions beyond project-level activities. From Brazil to Laos, initial JNR pilots and assessments are testing the waters.
Carbon Crystal Ball 2013
What voluntary carbon market movers and shakers are saying about 2013
Harmke Immink, Carbon Advisor
"2013 is the year for the carbon innovator – developing methodologies and projects that meet the regional needs of green growth but within the variety of new market mechanisms. Rolling out projects similar to those that registered successfully in the past year, be it forestry or programmatic schemes, will assist in reducing greenhouse gasses at lower cost. Using the increasing pool of project information in the public domain will help to reduce risk for project owners."
Jonathan Burnston, Director of Energy & Environmental Markets
"I expect to see a continued shift in liquidity – and in the attention of market participants – away from purely voluntary projects toward projects in new compliance markets, i.e. California, Quebec, British Columbia, Australia, and potentially in emerging Asian markets. Players that have traditionally focused on EU markets, both compliance and voluntary, will look to gain a foothold in North America. Hybrid voluntary/speculative positions will probably grow in project types that have some degree of expected future compliance value."
David Tulauskas, GM Director of Sustainability
"Chevrolet continues to invest in innovative carbon-reduction projects across America to make an impact on local communities, jobs and the environment. We are supporting a variety of forestry, renewable energy and energy-efficiency initiatives, encouraging unique ways for our country to sustain cleaner energy. Given the growth of the market and the scale of our goal – reducing up to 8 million metric tons of carbon dioxide by 2015 – we anticipate an expansion of the voluntary carbon market. In addition to our planned investments in 2013, we will introduce new methodologies that make the voluntary market even more accessible for people to invest in lower carbon technologies and make a difference in their communities."
Erik Wurster, Chief Executive Officer
"Stove projects will continue to grow in terms of volumes issued, as will water filtration projects. Large volumes of water credits will create headwinds for the overall GS VER market by... contributing to oversupply. The market will be a bit oversupplied in 2013, which will drop prices further, though nothing like what we've seen in the CDM markets."
Jeff Cohen, Senior Vice President of Science & Policy
"In 2013, we think California and other policymakers will focus on containing compliance costs and look to update and expand the scope of the ozone-depleting substances destruction protocol to insure a supply of quality offsets."
Jamal Gore, Managing Director
"2013 will be a year of rapid evolution in the voluntary carbon market. Things have changed a lot over the past few years, and the entire market is under pressure. As a result, expect a lot of experimentation with business models as firms try to adapt to these challenging new conditions."
Christopher Webb, Director
"Slow growth as global economic gloom continues; pre-compliance buyers will drive demand; supply will outstrip demand as REDD+ credits and cheaper CERs enter an already crowded market; investment in Africa likely to grow faster than any other region."
Edward Hanrahan, Executive Director
"I see considerable overall growth in demand from large corporates and industrials in both the USA and China as both start to seriously focus on their external impacts – including emissions. In addition, I believe that Corporates generally will be seeking out more projects with clear quantified outcomes other than just 'emissions' – i.e. water impacts, or tangible health and social impacts beyond just citing generic 'community co-benefits' as they try and drive greater efficiencies from spending on their external impacts. I believe there will be continued clear oversupply at the bottom end of the market and a continued fight amongst CDM project developers to try and drive credits from their projects (some of which are not particularly suited to the voluntary market) into the voluntary market."
Grattan MacGiffin, Voluntary Carbon Market Manager
Climate Change Capital
"I predict that we will see the following trends in the coming year. Firstly, a focus on carbon projects that have clear co-benefits and that invest in the local value chain, for example co-op managed and agricultural themed projects. I also anticipate more transactions of charismatic CERs as voluntary offsets, as the destruction of the CER price presents traditional offsetters with a ‘new’ supply of competitively-priced credits."
David Antonioli, Chief Executive Officer
Verified Carbon Standard
"2013 will bring big changes, and equally exciting opportunities to the voluntary market. Chief among these will be the transition to scaled up approaches like the VCS JNR and the development of standardized methods, which will enhance transparency, reduce transaction costs and set the stage for GHG reductions and removals on a scale we have not yet seen. Given the state of the regulated markets, I think the voluntary market’s role as an incubator of new approaches will be enhanced, and those who look at challenges as prospects will find some very interesting opportunities."
William Theisen, Consultant
Nexus-Carbon for Development
"Demand will continue turning to charismatic carbon credits, with premium prices extending beyond cookstove projects to other community projects, such as water filtration or household biogas interventions. Project developers and buyers will also focus on the measurement of a project's development impacts."
Raquel Orejas, Project Development Coordinator
Nature Services Peru
"In 2013, after the gloomy discussions in Doha for a second commitment period for Kyoto and the stabilization of European economies, the voluntary carbon market will hit a new record level in terms of volume. Price will continue in the same range as 2012, between $6/tCO2e and $8/tCO2e. Energy projects will continue to be at the top, while REDD+ credits will stabilize."
Tanya Petersen, Director of Marketing & Communications
The Gold Standard Foundation
As buyers better understand the potential scope and benefits of properly designed and implemented carbon projects, the demand for high quality carbon with MRV'd positive sustainable development impacts will speed up. Many compliance schemes are already grappling with how to include this and the high end of the voluntary market is leading the way.
Steve Hewson, Director of Sales and Marketing
"Last year saw the successful approval of new REDD+ methodologies and validation of voluntary REDD+ pilot projects. This year will experience further broadening of the voluntary land use carbon sector through methodological approval and validation of climate-smart agricultural and rangeland pilot projects that will deliver multiple food security benefits, climate change mitigation and adaptation. These may provide crucial lessons informing the international climate policy to eventually establish an agricultural work programme under the framework of the UNFCCC."
Jonathan Shopley, Managing Director
The CarbonNeutral Company
"Despite the lack of action at government level, I predict 2013 will see a rise in corporate funding for quality carbon projects. Businesses understand the opportunity and requirement to take action now – providing essential co-benefits to local communities and building supply chain resilience, in addition to delivering GHG reductions at lowest cost."
Sophy Greenhalgh, Programme Manager
International Carbon Reduction and Offset Alliance
"Another challenging year with corporates seeking cost efficiencies when considering their offset portfolios, leaning towards a mix of cheaper credits and charismatic credits to manage their emissions."
Mary Grady, Director of Business Development
American Carbon Registry
The California offset market will kick-off in earnest with the American Carbon Registry’s issuance of the first Registry Offset Credits under the ARB compliance protocols in early 2013.
Bertrand Rame, Co-Founder
Love The World
"Voluntary initiatives will definitely grow in 2013 as governments have been failing to impose any globally accepted policies. We are seeing a lot of momentum to voluntary offset emissions generated by conferences and events of all sorts (business, cultural, sporting)."
Renat Heuberger, Chief Executive Officer
South Pole Carbon Asset Management
"Post-2012, the voluntary carbon market is now the only remaining truly global effort to combat climate change. I am positive that even more leaders of businesses, NGOs, administrations are aware of the challenge and make 2013 another good year for voluntary offsetting."
Edit Kiss, Carbon Portfolio Manager
Eneco Energy Trade
"We are looking ahead to another very challenging year for the carbon markets. As the compliance markets are at cross-roads, the voluntary market will play a more important role than ever in providing signals and more and more players will likely turn to high quality voluntary carbon credits in the absence of meaningful compliance prices. We anticipate REDD+ to remain an attractive asset class in the voluntary market due to its triple bottom line, which manifests in the social and biodiversity benefits in addition to carbon."
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