Companion article at ecosystemmarketplace.com/articles/voluntary2016/
Hello, and greetings from Cologne, Germany, where we’re wrapping
up two intense weeks that began a few dozen kilometers north of us,
in the former German capitol of Bonn, where climate negotiators
have begun the process of activating the Paris Agreement.
Unfortunately, that meant I got swamped, which led to an unplanned
two-week hiatus on this podcast, and I do apologize for that – but
if you’ve been following Ecosystem Marketplace, you know we haven’t
been idle. Yesterday, we released our annual survey of the
voluntary carbon markets, which takes stock of what individuals,
corporations, and governments have been doing to offset their
greenhouse-gas emissions until the Paris Agreement takes effect –
which could happen as early as next year.
Earth. We broke it. We own it – and nothing is as it was: not
the trees, not the seas, not the forests farms or fields, and not
the global economy that depends on all of these. But we can restore
it – make it better than it is – more resilient – more sustainable.
But how? Technology? Geoengineering? Are we doomed to live on a
bionic planet, or is nature itself the answer? That’s the question
we explore each week on Bionic Planet, a podcast of the
Anthropocene – the new epoch defined by man’s impact on Earth.
Today, our focus is voluntary carbon markets.
Green-minded companies use them to reduce their carbon
footprints by offsetting those greenhouse-gas emissions that they
aren’t able to eliminate by, say, re-tooling their factories or
switching to renewable energy. Individuals use them as well – often
to offset their travel emissions – as do governments.
New research from Ecosystem Marketplace shows that these three
groups used voluntary carbon markets to reduce emissions by about
84 million tons of carbon dioxide last year alone, but the real
story isn’t the volume – which is still too small to change the
world – but rather, how those offsets are used in ever-more complex
and effective emission-reduction strategies.
That’s my Ecosystem Marketplace colleague Kelley Hamrick, who
spent a good chunk of the last six months on the phone with
thousands of carbon market participants cobbling together the
latest “State of the Voluntary Carbon Markets” report, which is
entitled “Raising Ambition” to reflect the ever-increasing
emission-reduction targets embedded in the Paris Agreement.
You can download the report at
Voluntary carbon markets provide a way for companies to reduce
their overall emissions by, say, saving endangered forests, or
planting trees, or financing the construction of wind farms.
They’re not to be confused with “compliance markets”, which are
imposed under a cap-and-trade regime like the one in
If you heard our two earlier episodes focused on the need to
create a price on carbon, you know the goal of such a price is to
force companies to reduce the amount of greenhouse gasses they pump
into the atmosphere. Voluntary markets are different – they’re not
so much an “incentive” as they are an “enabling mechanism” –
because companies and individuals that use them aren’t doing so to
comply with the law, but to do the right thing.
In fact, our research shows that companies that buy offsets are
usually also the ones that have already done the most to reduce
their emissions internally – and they’re using offsets to get to
zero net emissions – or at least try to. Offsetting, in other
words, is almost never a stand-alone strategy, but rather one
component in a larger, more involved emission-reduction
I had a brief chat with Kelley right after she posted the
report, and asked her how voluntary offsets usually fit into a
company’s emission-reduction program.
So, who are the buyers? Ultimately, they’re companies that want
to reduce their greenhouse-gas emissions, but sometimes they’re
brokers as well, and they can also be a new breed of consultancy
that helps manage emission-reductions. Let’s meet some now.
Did you hear what he said about price? If you heard our cost of
episodes on the need for a price on carbon, you know that 3.3
dollars is nowhere near the “social cost of carbon” –or the
damages that carbon dioxide causes once it’s in the atmosphere.
Now, I know what I said before – about voluntary carbon offsets
being an enabling mechanism more than an incentive, and that’s
true, but one way they enable companies to reduce is to create an
“internal price” on carbon – a price companies can use to push
greenhouse-gas emissions into the corporate consciousness. That
just doesn’t happen at $3.3 per ton, so lots of companies buy low
externally and then sell high internally – but that leaves another
problem: most emission-reduction projects simply aren’t viable at
$3.3 per ton.
Now, there are plenty of reasons the price is so low: it’s
mostly because prices reflect political will, and political will
has been pretty pathetic until last year, but it’s also because the
offsets sold last year were created earlier, so there was an
oversupply, and it’s because larger transactions can get away with
a lower price. Ultimately, however, a price this low just isn’t
sustainable – but there’s a sense that will be changing after
Paris, in part because there are so many other initiatives underway
outside of and tangential to the Paris Agreement.
CLIP: William Theisen EcoAct – 1
So – sustainable development goals, science-based targets, and
carbon pricing – we’ve covered carbon pricing a bit in our previous
editions of Bionic Planet, and we’re far from finished with that
rabbit hole, while we’ll be covering the sustainable development
goals in the coming week, so if you’re not familiar with them, be
sure to subscribe to Bionic Planet or check back soon.
CLIP: William Theisen EcoAct – 2
The gist is that more and more companies are responding to
demands for carbon neutrality, and while many start out by just
offsetting, they soon weave offsetting into a broader
CLIP: William Theisen EcoAct – 3
It’s a theme that emerged over and over again at Carbon Expo,
but one often lost on most observers and the media: carbon
offsetting isn’t a “distraction” as some like to say, and it isn’t
a way for companies to “buy their way out” of their obligations.
Instead, it’s a tool that helps get companies and customers and
suppliers all pointing in the same direction, as Danielle Spiesmann
of DHL makes clear.
CLIP: Daniele Start
DHL’s GoGreen initiative is worthy of an entire program, and if
I have the bandwidth to deliver, I will, because it involves a
complete restructuring of the company’s transport system, but one
that uses carbon offsetting to drive awareness – and it’s hardly an
exception. Companies like Unilever, Marks&Spencer, Microsoft,
and General Motors have all used voluntary carbon markets to drive
down emissions and raise awareness at the same time.
CLIP: Daniela 2
That about wraps up today’s show – but we’ll close with a
segment we call:
We’ll always have Paris, as in the Paris Accord – which was
woven throughout today’s program, so rather than do my usual
breakdown of some obscure element, I’d like to introduce you to
Laurence Tubiana, the French Climate Ambassador who may be the next
head of the United Nations Framework Convention on Climate Change.
Here is her summary of the two weeks of talks that just wrapped up
in Bonn. It’s fairly dense, and if you don’t understand all of it,
don’t worry – just keep listening to us, and soon it will all be
We covered the Bonn talks in a bit more detail at ecosystemmarketplace.com/articles/bonn2016/
And, to download your copy of the State of the Voluntary Carbon
Markets, visit ecosystemmarketplace.com/articles/voluntary2016/