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April 12, 2023

What’s Needed to “Upgrade” the Voluntary Carbon Market?

Mark Trexler

The ICVCM (Integrity Council for the Voluntary Carbon Market) has received a lot of press surrounding the recent release of its Carbon Carbon Principles (CCPs), characterized in the ICVCM CCP fact sheet as a set of 10 "fundamental principles for high-quality carbon credits that create real, verifiable climate impact, based on the latest science and best practice." And we can all probably agree that transparency, additionality, permanence, do no harm, etc. are great things to aspire to in the context of carbon offsets.  

But a 96-page statement of principles, especially when most of those principles have been around for a long time, doesn't tell us anything at all about how the ICVCM will suggest implementing those principles. We'll have to wait for the next phase of work to see that rather critical piece of work. Moreover, it remains to be seen whether the ICVCM can implement those principles in a way that would lead to a recognizable voluntary carbon market.

It's rarely explicitly acknowledged or discussed -- and the CCPs are no different -- just how HARD it is to get offsets even "right enough," and we've never even defined what "right enough" is. There is no such thing as "truth" when it comes to additionality, leakage, or baselines. There might be a permanence "truth," but imposing 100 or even 50 year permanence accountability is probably completely incompatible with today's voluntary markets.

Therefore, we should be asking whether the next phase of the ICVCM's work will explore and tackle questions like:

  1. 1
    What's the appropriate balancing of the objectives of "cost-effectiveness" and "environmental integrity?" They can't be simultaneously maximized for.
  2. 2
    What's the appropriate balancing between "climate integrity" and "SDG advancement" or "co-benefits."  They can't be simultaneously maximized for.
  3. 3
    What's the appropriate balancing between "permanence accountability" and the willingness of risk-averse buyers to participate in the market?
  4. 4
    What's the appropriate balancing between "dynamic baselines" for environmental integrity and the "revenue predictability" required by developers and investors.  
  5. 5
    How many false positives are "too many" for the voluntary carbon market? That's a policy question, not a technical question.  Many people are looking for perfection - that's impossible. I'd be happy with 80/20!
  6. 6
    But how do we assess how many false positives there may be? Several studies suggest we're closer to 20/80 than 80/20. And since we don't even ask new methodologies to assess their potential to allow false positives into the market, we're always being surprised.

This list could go one, but I'll leave it there. These are the questions that we need to be tackling in the context of "upgrading" the voluntary carbon market.  Will the ICVCM even tackle these questions -- or just gloss over them as we generally do.



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Mark Trexler


Mark has more than 30 years of regulatory and energy policy experience. He has advised clients around the world on climate change risk and risk management. He is widely published on business risk management topics surrounding climate change, including in the design and deployment of carbon markets. Mark has served as a lead author for the IPCC and holds advanced degrees from the University of California at Berkeley.

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