Industry players in the voluntary carbon market are unhappy with the lack of meaningful emission cuts, yet voluntary emissions cuts continue to gain steam. For instance, BP is spending $2.5 million to offset its carbon emissions in Australia.
Meanwhile, Brazil may set emission caps at 2005 levels.
The voluntary carbon offset market is not meeting meaningful emission cuts yet, with only 34.69 million tons of retired carbon offset credits, according to attendees at a recent carbon industry conference, reports Reuters.
Carbon credits totaling 123 million tons, valued at $705 million, were transacted in the global voluntary carbon market in 2008, according to New Energy Finance and Ecosystem Marketplace estimates, reports Reuters. More than 50 percent of those offset credits were originally designed for the United Nation’s Clean Development Mechanism (CDM), but were delayed by bottlenecks in the pipeline process.
Voluntary offset credits can change hands several times before they are retired, but credits do not offset greenhouse gas emissions until they are retired, or taken permanently off the market, by a supplier or purchaser.
The voluntary market operates outside mandatory emissions reductions schemes such as the Kyoto Protocol or the European Union’s Emissions Trading Scheme. It evolved primarily in the United States as a market-based mechanism to address climate change and in Europe as a byproduct of implementing the Kyoto pact, reports Reuters.
Carbon offset companies like Australia’s Carbon Conscious offer businesses a way to offset their carbon emissions through “carbon farming.” As an example, BP plans to offset its carbon emissions by paying $2.5 million (along with ongoing license fees) toCarbon Conscious to plant up to 10 million salt-resistant mallee eucalypt trees in saline-affected farmland in Australia’s wheat belt region, reports PerthNow.
The tree planting project will also generate tradable carbon credits under the Australian Government’s proposed Carbon Pollution Reduction Scheme (CPRS), according to PerthNow.
The forestation program will begin next year, with both companies sharing in the value of the resulting carbon offsets over a 15-year period, according to PerthNow. BP also has the option to invest additional funds for plantings in 2011 and 2012, once regulatory certainty surrounding the CPRS has been established, reports the news site. In August, Australia voted down its carbon trading scheme.
Under the carbon sink scheme, carbon-producing companies have access to carbon credits at a predetermined price, which protects them from future carbon price increases or supply shortages, reports PerthNow.
Earlier this year, BP’s top executive called for global carbon pricing.
Developing countries including Brazil, China, and India have been reluctant to commit to carbon emissions reductions, despite the urging of industrialized countries to set firm, but smaller, commitments ahead of the global climate change summit in December.
Brazil may consider changing its position on carbon caps. Brazil’s Environment Minister Carlos Minc recently said the country may set a cap on its greenhouse gas emissions at 2005 levels as it finalizes its proposals ahead of the global climate summit, which could cost the country at least $10 billion annually, reports Reuters.
Brazil emitted roughly 2.2 billion tons of carbon dioxide in 2005, primarily from Amazon forest destruction. If it adopted no mitigation measures, its emissions would increase to 2.8 billion tons annually by 2020, according to Minc, reports Reuters.
Brazil also announced it would expand its deforestation targets in the Amazon forest, aiming for an 80 percent reduction in the deforestation rate by 2020, based on the annual average of 19,500 sq km (7,528 sq miles) between 1996 and 2005, reports Reuters.