Abstract
A global carbon market has evolved in recent years, following negotiations for the United Nations Kyoto Protocol. A number of distinct markets are encompassed within its remit, including a voluntary retail arm. Although very small in comparison with other segments, it has large growth potential as it can extend to countries, customer groups and technologies not embraced by the existing compliance regime. However, this market has been characterised by an absence of publicly available market information and lack of transparency.
This study, which focuses on forestry, renewables and demand-side energy efficiency, found that voluntary market projects are usually small scale and located worldwide. A perceived customer preference for additional benefits such as sustainable development and conservation may account for the high prices sometimes observed. However, the voluntary rather than regulatory demand drivers mean significantly lower prices are typically paid, notably in North America. The US market is also characterised by a conflation with the Renewable Energy Certificates (RECs) market and a prevalence of projects situated in the home country. Challenges exist for this nascent market. There are concerns about the lack of credibility, which could hinder future investment and growth. Alongside the absence of a universal registry, a causal factor is the range of different procedures currently applied to projects.
|
