Our key takeaway: The future of the Voluntary Carbon Market (VCM) may be in jeopardy. The uncertainty in the market is affecting buyers’ confidence - with average prices falling during 2022 to less than $10 per tonne of carbon dioxide equivalent (tCO2e) (whereas a price of $16 per tonne of carbon dioxide equivalent is needed for 50% of investments in nature-based solutions to be viable globally). There are potential benefits to carbon credits that companies buy, but also a range of challenges to overcome. The Grantham Research Institute on Climate Change and the Environment has issued a call to action: two paradigm shifts are needed to enable a viable Voluntary Carbon Market. Companies need to stop their “faulty emissions accounting” of matching credits (of uncertain quality) to actual residual unabated emissions to claim that they are ‘carbon neutral.’ And companies need to prioritize human rights within their VCM programmes and projects - with a focus on empowering women, Indigenous Peoples and other affected communities. The scrutiny of the VCM is not going anywhere and there is work to build on by the Integrity Council for the Voluntary Carbon Market (ICVCM) on credit supply, and the Voluntary Carbon Markets Integrity Initiative (VCMI) and Science Based Targets initiative (SBTi) on credit demand. We need to crack this one for international climate action.
Grantham Research Institute on Climate Change and the Environment published ‘The voluntary carbon market and sustainable development’ (March 2023):