Making sense of the voluntary carbon market
- Media Manager
- Aug 22, 2023
- 1 min read
Eco-Business - China Dialogue
Written By: Rob Macquarie
Published: August 23rd, 2023
The voluntary carbon market (VCM) is best understood as the global trade in rights to claim responsibility for specific reductions of greenhouse gas (GHGs) emissions, or outright removals of GHGs from the atmosphere. These rights are traded by companies as tokens known as carbon credits, which can be sold multiple times. Carbon credits are often called “offsets”, but this term is confusing because offsetting means organisations or individuals claiming that credits directly counterbalance their own continued emissions.
The VCM may have evolved over more than two decades, but it is in the past three years that its monetary value has grown most rapidly, hitting US$2 billion in 2021. Analysts have estimated that this could increase to the tens of billions by 2030.
Why it’s more important than ever to invest in the voluntary carbon market
These sums are tiny compared to overall needs for the global transition to net-zero emissions; for comparison, governments worldwide received US$56 billion from mandatory emissions permits in 2021. But they could still benefit the world’s climate and sustainable development goals. Under the right conditions, carbon credits raise investment for essential elements of any viable global climate strategy.
