Standardization: The Key To An Effective Voluntary Carbon Market

It is imperative that humanity successfully overcome climate change. A vigorous voluntary carbon market that finances thousands of projects to exclude billions of tons of greenhouse gases from the atmosphere is one of the means to that end. Such a market must be built on trust, and generate actions of genuine atmospheric benefit. This feat can only be achieved in the context of strong, widely recognized standards.

Offset Projects and Standardization

In addition to the five criteria listed below, offset projects are expected to provide social and environmental co-benefits along with defined atmospheric benefits. The sustainable development capacity of well-designed projects to improve nature and society is a beautiful element of the project-based carbon market.

The voluntary carbon market today has a number of widely recognized project protocols that fulfill the role of a strong transparent standard. All self-respecting offset projects will meet the five criteria. A strong offset standard distinguishes itself by having the criteria laid out in a transparent fashion, clearly delineating its requirements and keeping with current science and best practices. ISO14064-2, a standard published by the International Organization for Standardization and the Voluntary Carbon Standard(2007) by The Climate Group, the International Emissions Trading Association, and the World Business Council for Sustainable Development are respected for their rigor, completeness, and good design.

In the past, voluntary project developers have not had broadly applicable standards available to which they could design, validate, and verify their projects. In this formative period, a great many dedicated scientists, dreamers, and entrepreneurs have poured their hearts and souls into developing projects to stop climate change. They often formulated their own standards for testing the effectiveness of their projects. Some of these standards were of excellent quality. Others less so.

Despite the lack of clear standards, there have certainly been offsets bought and sold. Ecosystemmarketplace.com estimates 23.7 million tons were transacted in 2006 at a value of 91 million dollars. Given a widespread understanding of the problem and a desire for change, one would expect to see a trusted market grow by a couple of orders of magnitude. However, with the general public unable to adequately assess the technical merit of a project, trust cannot be adequately formed and the vast potential of the voluntary carbon market cannot be fully realized. By allowing the public to understand exactly the criteria by which a project has been judged, the marketplace can make an informed decision on whether or not to buy an offset. Today's voluntary carbon market is rapidly developing, with standards falling into place. Carbon projects must adopt a recognized standard and can no longer simply comply with their own set of rules.

Toward a Successful Voluntary Carbon Market

Because the voluntary carbon market is by its nature voluntary, success or failure depends on goodwill and perceived value of its commodity: the voluntary carbon offset. Value is demonstrated in this way: illustrating how one ton of offset is functionally equivalent to one ton of CO2 no longer in the atmosphere. Goodwill is maintained by implementation of high-quality projects backed by transparency and good communication. Herein lies the crux of offsetting's contribution to the business case for sustainability. With value and goodwill maintained, a vibrant market with large capital flows, investing in a wide and deep array of offset projects, can be sustained. This allows both the implementation of existing technology and incentivizes development of the new. A strong climate change industry is thus created, offering broad business opportunity and growth.

The presence of such a market can only be considered a good thing. The power of the marketplace is profound. It forms the economic tapestry of today's society. One thing most people agree on is that the market system is effective at assigning capital to generate results. This is the type of elegant mechanism that one would want focused on stopping climate change. With the motive force of the marketplace deployed to enable projects of defined atmospheric benefit, we just might solve the problem of climate change.

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