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Policing the voluntary carbon market

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nature reports climate change | VOL 6 | NOVEMBER 2007 | 85
Policing the voluntary
carbon market
Voluntary greenhouse-gas emission offset markets are in need of government oversight.
Numerous opinion polls have
indicated that concern over global
climate change has risen dramatically
in the US and elsewhere1,2,3. One tangible
measure of this growing concern has been
the emergence of voluntary greenhouse-
gas (GHG) o set markets, in which
businesses and consumers purchase GHG
reductions instead of directly reducing
their own emissions4.
A GHG ‘o set’ is an intangible
economic commodity that represents
the avoidance or sequestration of GHG
emissions. GHG o sets are derived from
distinct projects, involving anything from
low-carbon energy production, to energy
e ciency measures, the destruction
of GHGs such as methane and nitrous
oxide, and tree planting and soil carbon
enhancement activities. O sets o er buyers
a potentially lower-cost alternative to
reducing their own emissions (Fig. 1).  e
geographic source of GHG emissions is
irrelevant to their climate change impact.
erefore, GHG emission reductions are a
global, rather than local, public good and
can be traded in a global market5.
Although currently small in
comparison to regulated o set markets
under the Kyoto Protocol, voluntary o set
markets are growing rapidly (Table 1),
especially in the United States, and could
expand tenfold by 20106. Even the US
House of Representatives is preparing to
enter the voluntary o set market as a buyer
under its Green Capital Initiative7.
e purchase of GHG o sets is
economically rational in cases where
reducing emissions attributable to one’s own
activities is more costly. Paying someone else
to pollute less may be wiser — both for the
purchaser and for society as a whole — than
reducing pollution oneself because more
emissions can be reduced for a given
expenditure of resources.  e atmosphere
bene ts to the extent that an o set reduction
is equivalent to an emission reduction made
directly by the purchaser. Recently, however,
o sets have been widely criticized in the
media as to whether they represent real
emission reductions8,9,10,11.
GHG o set transactions face three
fundamental challenges. First, a common
and credible procedure is necessary for
selecting emission reduction projects
made possible by o set credit sales and
for quantifying the reductions achieved
against a business-as-usual (BAU) baseline
in which no speci c actions are taken to
reduce GHG emissions. Second, credible
monitoring is needed to verify that
reductions actually occur as claimed.  ird,
unambiguous property rights over emission
reduction credits are essential for markets
to operate e ectively.
ese challenges are not unique to
o set markets, but they are symptomatic
of markets that trade in commodities
representing public goods. Such markets
do not arise naturally or function e ciently
without assigned property rights, rules
governing transactions, and oversight12.
Consumers need credible information on
the quality of what they are purchasing.
Similar problems exist with the development
of product standards, such as for organic
Before After Before After
Buyer Offset project
GHG emissions
Baseline emissions
Actual emissions
on re
on c
Figure 1 GHG offset transaction.
86 nature reports climate change | VOL 6 | NOVEMBER 2007 |
food or sustainable forest products. For
voluntary GHG o sets, commonly accepted
de nitions of quality are currently lacking.
Although GHG o set markets appear
to be expanding on their own, there is a
serious risk of their collapse due to a lack of
standards, policing and credibility.
What has proven most vexing for those
involved in GHG o set markets is de ning
‘additionality’.  is is a key factor determining
a project’s eligibility to sell credits.  e crucial
question is whether the added revenue or
other resources gained from selling GHG
o set credits somehow enables a project’s
implementation, or if the extra revenue
simply lines the pockets of those who would
have implemented the project anyway? In
markets for public goods that lack some form
of mandated quotas (for example, emission
caps), additionality determinations serve
the function of maintaining scarcity in the
marketplace. Without them, GHG o sets
representing business-as-usual reductions
will tend to  ood the market.
ere is no correct technique for
determining additionality because it
involves the evaluation of counterfactual
circumstances. No test for additionality
can provide certainty about what would
have happened otherwise.  e challenge
is akin to statistical hypothesis testing.
Adopt tests that are too stringent and one
risks disqualifying many truly additional
projects, thus restricting o set supplies
and increasing their prices. But adopt tests
that are too lenient, and the market will be
dominated by ‘free riders’ who would have
implemented their projects anyway.
Adding to this challenge is the fact that
the appropriate set of additionality tests
varies from one type of project to another.
For projects that involve  aring of methane
from land lls, for example, excluding
projects that are required by law or
regulation may be su cient to ensure that
the majority of projects are additional. But
for some energy-e ciency or renewable-
energy projects, such as investments in
wind turbines, more thorough tests are
needed to di erentiate additional from
BAU projects.  e solution to additionality
lies in adopting tests that will achieve a
balance of ‘false negatives’ (that is, truly
additional projects mistakenly classi ed
as business-as-usual) and ‘false positives
(that is, BAU projects classi ed as
additional)13. One of the key problems with
voluntary GHG o sets is that no central
authority exists to manage this balance
across the entire market
A second challenge for GHG o sets
has to do with monitoring and veri cation
to assure that o sets are being achieved
in the manner and quantity promised.
Generally, independent third-party
veri cation of o set projects against
a common standard is necessary for
consumers to have a reliable and unbiased
source of information on o set quality.
Analogously, we do not expect consumers
of organic food to monitor the farming
practices of their food suppliers. Yet, for
voluntary carbon o sets, there is no agreed
standard for monitoring methods or the
appropriate frequency and requirements
for veri cation. Determining appropriate
monitoring and veri cation standards
requires balancing costs — which,
if too high, might drive away more
cost-e ective projects — with the need
for environmental integrity.
Finally, GHG o sets face the challenge
of determining ownership of a particular
emission reduction. Ownership of o set
credits is relatively unambiguous in some
cases, but in other cases it is fraught
with complications. For example, the
rights to make speci c environmental
claims are o en disputed with energy-
e ciency or renewable-energy projects
where investors, equipment suppliers,
utilities and electricity customers are
all involved. Legal mechanisms are not
yet in place to disallow two parties from
selling the same reduction or to prevent
a single party from selling a reduction to
multiple buyers. Consistent rules that will
promote investment and market e ciency
are needed, as well as registries to foster
transparency of transactions and track
the retirement of o sets used to make
emission reduction claims.
A number of organizations involved in
the voluntary o set market are developing
standards in an attempt to address these
challenges. But it is not clear if any of these
standards will gain market acceptance
or have the ability to police the practices
of market participants. To date, none of
them has adequately addressed all three
of the aforementioned challenges for
establishing a true o set ‘commodity’
(that is, project eligibility, monitoring and
veri cation procedures, and enforcement of
ownership)14. Although the consequences
are di cult to predict, the confusion
produced by a host of independent
‘standards’ operating in a regulatory vacuum
has the potential to discredit market-based
environmental policies with the public as a
means of addressing climate change.
Environmental commodity markets
are inherently more susceptible to
market failures than traditional markets
because the commodity transacted is both
intangible and represents a public good.
Where buyers cannot easily evaluate the
quality of a good or service, there is a clear
need for quality assurance mechanisms.
Without such mechanisms, competitive
pressures force sellers to minimize quality
and limit transparency.  e result will be
that bad projects will drive good projects
out of the market.
Some governments are beginning to
respond to the need for oversight of these
voluntary markets. In January 2007, the
UK’s Department of Environment and
Rural A airs dra ed a code of best practice
for the voluntary GHG o set market15, and
in July 2007, the Australian government
announced that it would provide a
government-administered program for
businesses and households to become
carbon neutral’ via approved o sets16,17.
Although government intervention
is no guarantee that the challenges
discussed above will be effectively
addressed, we find these efforts
laudable, and call on the US and other
governments to follow the example of the
UK and Australia by setting standards
and overseeing the voluntary GHG offset
marketplace. Specifically, governments
should initially develop best-practice
guidelines that address the three key
challenges described above.
These voluntary guidelines should
immediately be followed by a more
thorough process of standard setting,
with a board to approve project eligibility
criteria, accounting methodologies, as
well as monitoring, registration and
public reporting requirements. Ideally,
governments should build off the
existing work under the United Nations
Framework Convention on Climate
Table 1 Size of GHG emissions trading markets
2006 volume
(million tons CO
2006 value
(US$ million)
GHG offset market
Total Voluntary Market 23.7 91
Voluntary OTC* 13.4 54.9
Chicago Climate Exchange
10.3 36.1
Other GHG trading schemes
EU Emissions Trading Scheme
1,101 24,357
Clean Development Mechanism 475 5,257
* ‘Over-the-counter’
North America’s only marketplace for integrating voluntary legally binding emissions reductions with emissions trading and offsets for
greenhouse gases.
Launched in January 2005, the largest regulatory-based multi-country, multi-sector GHG emissions trading scheme worldwide.
nature reports climate change | VOL 6 | NOVEMBER 2007 | 87
Change and its Clean Development
Mechanism18 (which allows developed
countries to invest in projects that reduce
emissions in developing countries as an
alternative to more expensive emission
reductions in their own countries),
New South Wales’ Greenhouse Gas
Reduction Scheme19 (which requires
electricity retailers and other parties to
meet mandatory targets for reducing
or offsetting their emissions from the
electricity they supply or use), and
existing non-governmental organization
efforts20. Furthermore, they should
cooperate in their standard setting
processes to harmonize rules and create
a globally-recognized and homogeneous
GHG offset commodity for voluntary
markets. The US Department of
Agriculture has developed a similar
process of bilateral cross-recognitions
of standards for organic food labels that
may serve as a useful model.
Ultimately, mandatory government
policy must be our primary approach
to dealing with climate change and the
GHG emissions that cause it. However,
voluntary GHG o set markets can
contribute to emissions mitigation and
sustainable development objectives while
government-mandated schemes are under
development. Voluntary markets can also
foster innovation through new technologies
and project types still under evaluation
by compliance emission markets. While
governments focus on developing a
consensus on GHG mitigation policies, or
more stringent policies, the voluntary o set
market, with proper government oversight,
has the potential to play a signi cant role in
mitigating future climate change.
1. Bannon, B. et al. Americans’ Evaluations of Policies to Reduce
Greenhouse Gas Emissions (New Scientist Magazine, Resources
for the Future, Stanford University, 2007); http://media.
4. Hamilton, K. et al. State of the Voluntary Carbon Market 2007:
Picking Up Steam (EcoSystem Marketplace and New Carbon
Finance, 2007);
acrobat/Stateo heVoluntaryCarbonMarket17July.pdf
5. Jacobs, M. e Green Economy (Pluto, London, 1991).
6. http://www.ic .com/Newsroom/carbon-o sets-2006.asp
8. Revkin, A. Carbon-neutral is hip, but is it green?
New York Times, April 29 2007.
9. Harvey, F. & Fidler, S. Industry caught in carbon ‘smokescreen’.
Financial Times, April 25 2007.
10. Carbon o sets: Sins of emission. e Economist,
August 14 2006. Nature 444, 976–977 (2006).
11. Neumayer, E., Weak versus Strong Sustainability
(Edward Elgar Publishing, Cheltenham, 2003).
12. Trexler, M. C. et al. Sustainable Development Law & Policy VI
(2), 30 (2006).
13. Broekho , D. Linking Markets for GHG Reductions: Can It Be
Done? (International Network for Environmental Compliance
and Enforcement, 2007);
dublin/Broekho .pdf
14. DEFRA Establishing a voluntary code of best practice for the
provision of carbon o setting to UK customers; http://www.defra. setting-cop/index.htm
July18o setFTC.shtml 16.
19. Broekho , D. Vo lun tar y C arb on O  sets — Getting What You
Paid For (World Resources Institute, 2007); http://pdf.wri.
org/20070718_broekho _testimony.pdf
1Princeton University; 2Greenhouse Gas
Experts Network; 3World Resources Institute;
4EcoSecurities; 5 e Gold Standard;
6Abatement Solutions — Asia Paci c
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12557-06PS2007ClusterAd_HPH 1 5/1/07 10:47:42
... We present how the energy provider can turn carbon footprint reductions into substantial profits through RECs trading. The Kyoto Protocol grant offsetting is a way for government and private enterprises to obtain carbon credits that they could trade in the marketplace [29]. Carbon emissions can also be addressed through RES systems, the shape of RECs or the RES energy purchased by utilities, and carbon offsets by GHG reporting programs. ...
... At this point, a consumer subproblem (28) and an energy provider subproblem (29) have been taken apart from the Lagrange dual function. Moreover, by setting buying price ν k and selling price (ν k + o k ) in the aspect of the consumer's view, subproblems (28) and (29) are the same as the consumer welfare function and the energy provider profit function, respectively. ...
... At this point, a consumer subproblem (28) and an energy provider subproblem (29) have been taken apart from the Lagrange dual function. Moreover, by setting buying price ν k and selling price (ν k + o k ) in the aspect of the consumer's view, subproblems (28) and (29) are the same as the consumer welfare function and the energy provider profit function, respectively. Consequently, we can write the Lagrange dual problem as follows: ...
Full-text available
With the technical growth and the reduction of deployment cost for distributed energy resources (DERs), such as solar photovoltaic (PV), energy trading has been recently encouraged to energy consumers, which can sell energy from their own energy storage system (ESS). Meanwhile, due to the unprecedented rise of greenhouse gas (GHG) emissions, some countries (e.g., Republic of Korea and India) have mandated using a renewable energy certificate (REC) in energy trading markets. In this paper, we propose an energy broker model to boost energy trading between the existing power grid and energy consumers. In particular, to maximize the profits of energy consumers and the energy provider, the proposed energy broker is in charge of deciding the optimal demand and dynamic price of energy in an REC-based energy trading market. In this solution, the smart agents (e.g., IoT intelligent devices) of consumers exchange energy trading associated information, including the amount of energy generation, price and REC. For deciding the optimal demand and dynamic pricing, we formulate convex optimization problems using dual decomposition. Through a numerical simulation analysis, we compare the performance of the proposed dynamic pricing strategy with the conventional pricing strategies. Results show that the proposed dynamic pricing and demand control strategies can encourage energy trading by allowing RECs trading of the conventional power grid.
... However, the aforementioned companies should be seen as the exception-not the rule-when it comes to CDR procurement. The vast majority of companies have not yet engaged with the CDR market, and many companies are still purchasing avoided emissions credits, which have been plagued with issues of additionality, monitoring, reporting, and verification (MRV) (Gillenwater et al., 2007;Miltenberger et al., 2021). That said, significant work must be done on MRV in the CDR market to ensure that these credits are verifiably removing CO 2 from the atmosphere. ...
... Decades ago, tonne-year carbon accounting was initially proposed because scholars wanted to create an equivalence factor to directly compare the impact of a certain volume of avoided emissions with a certain volume of temporarily sequestered emissions (Chomitz, 2000;Costa and Wilson, 2000;Fearnside et al., 2000;Cacho et al., 2003). However, in the wake of the Kyoto Protocol, which first established a robust international carbon market, there have been a range of concerns raised about the accuracy, additionality, and environmental impact of credits sold on international exchanges-especially for avoided emissions credits (Gillenwater et al., 2007;Richards and Huebner, 2012;Rosen, 2015;Miltenberger et al., 2021). These concerns, in combination with a growing scientific consensus that CDR is arithmetically required for meeting temperature targets and addressing historical emissions (IPCC, 2018, means that companies such as Microsoft, Stripe, Alphabet, Shopify, Meta, and McKinsey are integrating CDR credits-not avoided emissions credits-into their new climate strategies (Joppa et al., 2021;Frontier, 2022). ...
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Recently, a consortium of companies including Stripe, Alphabet, Shopify, Meta, and McKinsey allocated US$925 million for advanced market commitments to kickstart the early-stage Carbon Dioxide Removal (CDR) market. We argue that it is now more important than ever to consider a Global Cooling Potential (GCP) perspective in corporate CDR procurements. Currently, CDR projects are evaluated and priced on a simple cost-per-tonne basis, which fails to monetize storage duration and can ultimately incentivize the large-scale procurement of short-duration CDR. However, the relative duration of carbon storage is a critical aspect of any CDR project given the implications for climate warming from growing atmospheric concentrations of carbon dioxide. In this perspective article, we apply tonne-year carbon pricing to Microsoft and Stripe's initial CDR procurements to demonstrate that a combination of tonne-year pricing and conventional pricing could produce a CDR portfolio that simultaneously prioritizes storage duration, volume, and temporal urgency, which are all important considerations for maximizing GCP.
... Examples of compliance markets are the California cap and trade program, the EU Emissions Trading System (EU ETS), and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Voluntary markets are comprised of organizations that elect to reduce their carbon footprints as part of an environmental or social governance mission or to meet increasing consumer demand for more sustainable purchases (Gillenwater et al., 2007). Voluntary markets, which operate without any regulatory cap or issued allowances, trade entirely in offsets. ...
... Methods to develop a carbon offset align with international standards (ISO 14064-2) and are detailed in what is referred to as a carbon protocol or methodology depending on the offset registry (Sapkota & White, 2020). Protocols and methodologies typically undergo some combination of public consultation, peer review, and stakeholder input to provide a transparent, rigorous scientific framework and accounting procedure for the development, verification, and monitoring of offset projects (Gillenwater et al., 2007). A protocol or methodology addresses each aspect of the project including eligibility criteria such as temporal and spatial boundaries, additionality tests or requirements, baseline establishment, monitoring of emission sources, sinks and pools, QA/QC methods, risk accounting, and quantification of emission reductions, which pending verification become carbon offsets. ...
Wetland restoration and conservation provide a wealth of benefits such as storm surge reduction, fish and wildlife habitat, water quality improvement, recreation, job creation, and carbon sequestration (Batker et al., 2010; Jenkins et al., 2010). One of the largest challenges to wetland management is finding sufficient financing for coastal restoration and conservation that is on the scale that most stakeholders agree is needed. Carbon sequestration refers to the removal of atmospheric carbon, in this case by plants (photosynthesis) or other storage mechanisms (i.e., soils), which can mitigate greenhouse gases released as a result of changes in land use and the burning of fossil fuels (Euliss et al., 2006; Kayranli et al., 2010; Lal, 2004). Traditionally, the carbon sequestered in vegetated coastal ecosystems, specifically mangrove forests, seagrass beds, and salt marshes, has been termed “blue carbon” (Mcleod et al., 2011; Nellemann et al., 2009), although the authors believe this definition should be expanded to include tidally influenced cypress‐tupelo forests and freshwater marshes (Edwards et al., 2019; Lane et al., 2017). Wetland restoration is an effective climate change mitigation strategy because it enhances carbon sequestration and avoids carbon releases that would occur in the absence of restoration activities (Lane et al., 2016; Pendleton et al., 2012; Sapkota & White, 2019). Because wetlands sequester large amounts of carbon in soils and plants, the growing carbon market provides a potential funding source to support restoration and conservation of these valuable ecosystems (Murray et al., 2011). The goal of this chapter is to provide wetland managers a general understanding of wetlands’ role within carbon markets, how a wetland carbon project is developed, what challenges wetlands face within these markets, and identify information needs for future scientific and policy investigation to support current and future wetland carbon offset programs.
... This paper addresses the question of unit quality (the second factor, above) for carbon offset credits. High quality offset credits must meet several criteria, including that they represent emission reductions that are additional, not overestimated, permanent, and not double counted [1,[11][12][13][14]. 2 Offset credits should also be associated with mitigation actions that do not cause social and environmental harm [11,13] andideallycontribute to social and environmental co-benefits [16]. ...
Full-text available
Under Article 6.2 of the Paris Agreement, countries have the option to use existing crediting schemes, including schemes serving voluntary carbon offset markets, as a basis for trading “mitigation outcomes”. Parties to the Paris Agreement engaged in such trading must seek to ensure its environmental integrity, an essential component of which is ensuring the quality of units (or “credits”) transacted. In deciding whether to rely on existing crediting schemes, therefore, countries must be able to assess the relative quality of the credits these schemes issue. Assessing unit quality can be a complex undertaking involving analysis at multiple levels (e.g. institutions, methodologies, and mitigation activities). An essential requirement, however, is for crediting schemes to have robust standards and practices in place for ensuring unit quality. This paper presents a framework for assessing the standards and practices of crediting schemes on aspects related to unit quality, and road tests this framework on six existing schemes. A key finding is that all six schemes have weaknesses in their standards and practices, suggesting the need for ongoing improvement as carbon market institutions continue to evolve under the Paris Agreement.
... The voluntary carbon market has been subject to academic and grey literature in the past. In particular, early literature studied the functioning of the voluntary carbon market and its potential benefits and challenges in the broader context of the emerging practice of carbon offsetting (Bellassen & Leguet, 2007;Bumpus & Liverman, 2008;Corbera et al., 2009;Gillenwater et al., 2007). By analysing narratives and discourses, several scholars explored the legitimacy of voluntary carbon offsetting (Bäckstrand & Lövbrand, 2006;Blum & Lövbrand, 2019;Lovell et al., 2009), including in the post-Paris era (Blum, 2020;Blum & Lövbrand, 2019), and even identified different 'thought spaces' of how the voluntary carbon market could be conceptualized in the future (Lang et al., 2019). ...
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On the one hand, a large number of companies have committed to achieve net zero emissions and many of them foresee to offset some remaining emissions with carbon credits, suggesting a surge of future demand. Yet, the supply side of the voluntary carbon market is struggling to align its business model with the new legal architecture of the Paris Agreement. This article juxtaposes these two perspectives. It provides an overview of the plans of 482 major companies with some form of neutrality/net zero pledge and traces the struggle on the supply side of the voluntary carbon market to come up with a viable business model that ensures environmental integrity and contributes to achieving the objectives of the Paris Agreement. Our analysis finds that if carbon credits are used to offset remaining emissions against neutrality objectives, these credits need to be accounted against the host countries’ Nationally Determined Contributions (NDCs) to ensure environmental integrity. Yet, operationalizing this approach is challenging and will require innovative solutions and political support. Key policy insights • There is a growing mismatch between the faith placed in carbon credits by private sector companies and the continued quest for a common position of the main suppliers of the voluntary carbon market. • The voluntary carbon market has not yet found a way to align itself with the new legal architecture of the Paris Agreement in a credible and legitimate way. • Public policy support at the national and international level will be needed to operationalize a robust approach for the market’s future activities.
... Off-set certificates/units are considered as an essential tool to improve sustainability and boost global decarbonisation by financing initiatives related to carbon reduction in developing countries. On the other hand, compensation by off-set units may lead to controversy regarding effectivity and reliability [52]. ...
Full-text available
The concept of (net) zero greenhouse gas (GHG) emission(s) buildings is gaining wide international attention and is considered to be the main pathway for achieving climate neutrality targets in the built environment. However, there is an increasing plethora of differing terms, definitions, and approaches emerging worldwide. To understand the current progress of the ongoing discussion, this study provides an overview of terms, definitions, and key features from a review of 35 building assessment approaches. The investigation identified that 13 voluntary frameworks from 11 countries are particularly characterised by net zero-carbon/GHG emissions performance targets, which are then subject to a more detailed analysis. The review was organised in the context of the project IEA EBC Annex 72 on “Assessing Life Cycle Related Environmental Impacts Caused by Buildings”, which involves researchers from over 25 countries worldwide. In the current dynamic political surroundings and ongoing scientific debate, only an initial overview of this topic can be presented. However, providing typologies and fostering transparency would be instrumental in delivering clarity, limiting misunderstanding, and avoiding potential greenwashing. To this end, this article categorises the most critical methodological options—i.e., system boundaries for both operational and embodied GHG emissions, the type of GHG emission factor for electricity use, the approach to the “time” aspect, and the possibilities of GHG emission compensation—into a comprehensive framework for clarifying or setting (net) zero GHG emission building definitions in a more systematic way. The article concludes that although variations in the existing approaches will continue to exist, certain minimum directions should be considered for the future development of harmonised (net) zero GHG emissions building frameworks. As a minimum, it is recommended to extend the usual scope of the operational energy use balance. At the same time, minimum requirements must also be set for embodied GHG emissions even if they are not considered in the carbon/GHG emissions balance.
... The additional reductions are referred to as a project's additionality. Measuring additionality is a difficult endeavor for a number of reasons beyond the hypothetical counterfactual (Gillenwater et al 2007). ...
Full-text available
Carbon pricing has been hailed as an essential component of any sensible climate policy. Internalize the externalities, the logic goes, and polluters will change their behavior. The theory is elegant, but has carbon pricing worked in practice? Despite a voluminous literature on the topic, there are surprisingly few works that conduct an ex-post analysis, examining how carbon pricing has actually performed. This paper provides a meta-review of ex-post quantitative evaluations of carbon pricing policies around the world since 1990. Four findings stand out. First, though carbon pricing has dominated many political discussions of climate change, only 37 studies assess the actual effects of the policy on emissions reductions, and the vast majority of these are focused on Europe. Second, the majority of studies suggest that the aggregate reductions from carbon pricing on emissions are limited—generally between 0% and 2% per year. However, there is considerable variation across sectors. Third, in general, carbon taxes perform better than emissions trading schemes (ETSs). Finally, studies of the EU-ETS, the oldest ETS, indicate limited average annual reductions—ranging from 0% to 1.5% per annum. For comparison, the IPCC states that emissions must fall by 45% below 2010 levels by 2030 in order to limit warming to 1.5 °C—the goal set by the Paris Agreement (Intergovernmental Panel on Climate Change 2018). Overall, the evidence indicates that carbon pricing has a limited impact on emissions.
Nature-based solutions (NBS) could mitigate significant carbon emissions needed to achieve the Paris climate goals. While public policies are essential to support the use of nature to mitigate climate change, there is an investment gap in the amount currently available for environmental conservation and restoration and what is needed. As such, a significant amount of investment can be mobilised via voluntary carbon offset projects. This chapter will first discuss the concept of carbon sequestration and NBS for climate mitigation before discussing the concept of voluntary carbon markets. The chapter will then examine the various voluntary carbon offset standards available before discussing several offset project types. Finally, the chapter will discuss the role of carbon offset credits in achieving corporate carbon neutrality.
We assess the communications of 37 airlines on their own websites regarding voluntary carbon offsets (VCO) to determine the extent to which they are either trustworthy or misleading. We propose an innovative coding framework that captures the trustworthy or misleading attributes of the messages as they are applied to: i) the type of claim (product, process, fact or image), and ii) the nature of the claim (fibbing, hidden trade-off, no proof, vagueness, irrelevance, lesser of two evils or worshiping false labels). We deploy a quantitative, multi-method approach that combines content analysis and discrete choice modelling, and we corroborate the taxonomy developed with lexical analysis. We identify the various factors that affect the pattern of 56% of claims being trustworthy and 44% being misleading. We demonstrate how a combined study of the trustworthy or misleading characteristics of communications provides more learning opportunities than studying either individually.
Technical Report
Full-text available
State of the Voluntary Carbon Market 2007: Picking Up Steam (EcoSystem Marketplace and New Carbon Finance
  • K Hamilton
Hamilton, K. et al. State of the Voluntary Carbon Market 2007: Picking Up Steam (EcoSystem Marketplace and New Carbon Finance, 2007);
Carbon-neutral is hip, but is it green
  • A Revkin
Revkin, A. Carbon-neutral is hip, but is it green? New York Times, April 29 2007.
Industry caught in carbon 'smokescreen' . Financial Times Carbon off sets: Sins of emission
  • F Harvey
  • S Fidler
Harvey, F. & Fidler, S. Industry caught in carbon 'smokescreen'. Financial Times, April 25 2007. 10. Carbon off sets: Sins of emission. Th e Economist, August 14 2006. Nature 444, 976–977 (2006).
Weak versus Strong Sustainability
  • E Neumayer
Neumayer, E., Weak versus Strong Sustainability (Edward Elgar Publishing, Cheltenham, 2003).
Broekhoff .pdf 14. DEFRA Establishing a voluntary code of best practice for the provision of carbon off setting to UK customers
  • D Broekhoff
  • Linking Markets
Broekhoff, D. Linking Markets for GHG Reductions: Can It Be Done? (International Network for Environmental Compliance and Enforcement, 2007); dublin/Broekhoff.pdf 14. DEFRA Establishing a voluntary code of best practice for the provision of carbon off setting to UK customers; http://www.defra. setting-cop/index.htm 15. July18off setFTC.shtml 16. au/greenhousefriendly/index.html 17. 18.
Industry caught in carbon 'smokescreen'. Financial Times
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