The global Voluntary Carbon Offsets market size is projected to reach US$ 700.35 million by 2027, from US$ 305.79 million in 2020, at a CAGR of 11.73% during 2021-2027.
Carbon offsets are measured in metric tons of carbon dioxide-equivalent (CO2e) and may represent six primary categories of greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), and sulfur hexafluoride (SF6). One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases. There are two markets for carbon offsets. In the larger, compliance market, companies, governments, or other entities buy carbon offsets in order to comply with caps on the total amount of carbon dioxide they are allowed to emit. This market exists in order to achieve compliance with obligations of the Kyoto Protocol, and of liable entities under the EU Emission Trading Scheme. In the much smaller, voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources. For example, an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel. Many companies offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related with their product or service purchase (such as offsetting emissions related to a vacation flight, car rental, hotel stay, consumer good, etc.).
carbon dioxide emissions are constantly increasing, which makes more and more people realize the importance of reducing carbon dioxide emissions. This voluntary market has prompted project developers to create technological innovations to reduce greenhouse gas emissions. Since trading of voluntary carbon offsets first took off in the late 2000’s, voluntary carbon projects have helped to reduce, sequester, or avoid over 435.7 MtCO2e–equivalent to not consuming over one billion barrels of oil. These projects are supported by companies, individuals and governments purchasing carbon offsets.
As a part of the global carbon market, the voluntary CO2 market is different from the compliance schemes under the Kyoto Protocol and EU-ETS. Instead of undergoing the national approval from the project participants and the registration and verification process from the UNFCCC (United Nations Framework Convention on Climate Change), the calculation and the certification of the emission reduction are implemented in accordance with a number of industry-created standards.
The advantage of lower development/transaction cost makes the voluntary market especially attractive to those small and sustainable projects to which the UN certification process is too expensive. Compared to compliance markets like the EU-ETS, the total size of the voluntary CO2 market is much smaller. Credits originated from the voluntary CO2 market are called Voluntary Emissions Reductions (VER). Currently VERs are mostly used by companies who are looking to voluntarily offset the emissions generated during their business activities in order to show social responsibility and establish a healthy and green corporate image. An increasing number of companies are investing in VER projects in order to reduce their carbon footprint and to reach a “zero emission” status.
Companies that are unable to reduce their emissions can purchase carbon offsets from verified suppliers to offset their emissions. The revenues collected are used to finance the carbon reduction project. Voluntary offset buyers are often driven by certain considerations such as safeguarding their reputation, ethics, and corporate social responsibility (CSR). There are various participants who are involved in the voluntary carbon market. The main participants include consumers who purchase the offsets from providers, providers (both domestic and international) of several types of offsets, suppliers who may include universities and colleges, governments, and non-governmental organizations, as well as third-party verifiers and developers of quality assurance programs.
Global Voluntary Carbon Offsets Market- Key Players
Aera Group, Terrapass, Green Mountain Energy, Schneider, EcoAct, 3Degrees, NativeEnergy, Carbon Credit Capital, GreenTrees, Allcot Group, Forest Carbon, Bioassets, CBEEX, Biofílica, WayCarbon, Guangzhou Greenstone, are some key players in the market.
Frankly speaking, people hope to build a low-carbon society. Many companies are carrying out these actions. However, excluding the EU market, due to various factors, developing countries and some developed countries are not willing to bear this responsibility. Companies are not willing to bear high costs unless enforced. For many regions, the compliance market is just an ideal. While total voluntary offset emissions reductions remain small compared to what’s needed to combat climate change globally, actions on the voluntary markets have a ripple effect into compliance markets. Despite the comparatively small volume, voluntary offsets have an outsized impact on compliance markets and on emissions reductions activities in general.
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