December 22, 2006—A new report from ICF International shows that the voluntary carbon offsets market has steadily grown in recent years, although it is still quite small compared to the market for project offsets that companies can use for compliance purposes under the Kyoto Protocol.
The World Bank estimates that in 2005 the market for voluntary carbon offsets made up less than 10 million tons (Mt) of CO2e, or less than 1 percent of global carbon market transactions and less than 1 percent of the total market value of US$11 million.
The International Emissions Trading Association and the World Bank estimate that the market for carbon credits has increased to $2.3 billion in the first nine months of 2006 and that the overall carbon market is now worth more than $21.5 billion.
The market is experiencing significant growth as companies not subject to caps on carbon emissions decide voluntarily to offset some or all of their emissions from a variety of sources directly or indirectly related to their business activities.
A variety of obstacles could, however, impede the market’s future growth, notes the report. “To continue its recent explosive growth, the voluntary carbon market must decisively address the significant persistent challenges of credibility, fragmentation, and overlap with the mandatory carbon emissions market,” said Eric Lounsbury, carbon market analyst in ICF’s London Office.
For the complete report, “Voluntary Carbon Offsets Market: Outlook 2007,” visit ICF’s Web site.
