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What is voluntary carbon offsetting?

Severin Fischer
The (mandatory) carbon offset market has been first developed under the framework of the United Nations Framework Convention on Climate Change (UNFCCC) with the aim of helping the Northern countries in reaching their Kyoto Protocol target by funding greenhouse gases (GHG) emissions reduction actions in Southern countries. Regional markets have also been set up in order to foster decarbonization by giving a price to GHG emissions, the most important and known of them being the EU Emissions Trading System in Europe, the RGGI in USA, the California cap & trade system, or the various local markets in China that are soon to be merged in a country wide market according to the Chinese decarbonization roadmap. Many other examples can be named in South Korea, Australia, Quebec, Japan, etc. A holistic and updated view on carbon markets can be found in recent I4CE publication (https://www.i4ce.org/wp-core/wp-content/uploads/2018/04/Global-Carbon-Account-2018_5p-1.pdf). Under these regional markets, carbon intensive sectors (such as energy, power, cement, glass, steel, etc.) are required to get a minimum of carbon credits with regards to their emission level.
To complement these “mandatory” markets, the voluntary market took off to address carbon emitters in the other parts of the economy: cities, businesses, individuals, that would reach total or partial “carbon neutrality” by funding smaller carbon reduction or carbon storage programs managed by private organisations with side benefits to the communities and the biodiversity – anticipating the Sustainable Development Goals that the UN issued in 2015. Project developers or traders can now propose carbon credits issued from a large range of programmes such as: 
 • renewable power infrastructures that contribute to decarbonize the local power grid and thus avoid GHG emissions; 
 • energy efficiency and fuel switching action;
 • landfill projects designed to capture the methane issued by the waste disposal and provide it to the communities in substitution to fossil fuels;
 • local renewable lighting systems that avoid using a high-carbon power to get light in remote areas;
 • alternative low carbon transportation infrastructure (like cycling); 
 • efficient cook stoves, or individual biogas producers using cattle manure, which will significantly reduce wood consumption for daily cooking in rural communities, and hence prevent deforestation that generates carbon emissions; 
 • supply of water filters to households in rural communities, which will remove the need to boil water and hence cut carbon emissions;
 • in transparent and win-win partnership with local communities, protection of existing forest areas that are clearly threatened by local human activities, in order to maintain carbon storage along with benefits for biodiversity; and afforestation in new regions, in order to develop new carbon sinks;
 • climate-friendly practices in agriculture that maintain carbon in the soils while increasing their fertility, restore biodiversity and develop new sources of income for smallholders.
Voluntary carbon projects are reported in 83 countries around the world. Since 2005, a total of 2,008 projects have issued offsets during this time, mainly in Asia (51%) and North America (18%). Another 11% of projects have been based in Latin America and the Caribbean, 11% in Europe, and 11% in Africa. In 2017, issuances (62.7 MtCO2e) and retirements (42.8 MtCO2e) reached record-highs in the carbon offsets voluntary market. For more information, please refer to https://www.forest-trends.org/wp-content/uploads/2018/09/VCM-Q1-Report_Full-Version-2.pdf which provides a global and updated view on the voluntary market trends.
The voluntary market is gaining momentum and recognition under the UNFCCC framework as Paris Agreement Article 6 paves the way for avoiding double counting when offsetting carbon through the voluntary market, which is an essential condition to the use of carbon credits that are issued out of the official UNFCCC mechanisms (Clean Development Mechanism and Joint Implementation). Several solutions are currently worked out by the main certification standards and labels to achieve this ambition, with the help of the International Carbon Reduction and Offset Alliance: a non-profit organisation made up of carbon reduction and offset providers in the voluntary carbon market. Please refer to www.icroa.org for more information. When this is achieved, countries or businesses regulated under regional mandatory markets could get more flexibility to turn to the voluntary market to cope with their carbon-related obligations, and hence foster this market which is today more focused on communities, small businesses and individuals. 
Moreover, the International Civil Aviation Organization (ICAO) committed to stabilize sector wide emissions by 2020 and onwards (hence at 2020 level, in an industry where annual growth reaches more than 2% every year and is increasing). Since renewable jet fuel is not yet operational, the industry association has turned to offsets as a way for airlines to meet emissions reductions goals, and ICAO is starting to craft its own offsetting scheme, known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA, please refer to https://www.icao.int/corsia for more information). Specifics regarding voluntary offsets, such as particular standards or project types, to be allowed in this market require additional negotiations, but the potential is very high for fostering voluntary markets.
Article written by Severin Fischer