Explaining the Voluntary Carbon Market: What it is and Why it Matters

The carbon market is growing – no, wait – booming. 📈 But how do you know whether a carbon offset company is as ethical as they claim?

Companies, individuals, and countries all over the world want to show they’re sustainable and care about the environment.

And they should. With the sixth IPCC climate report, the UN calling for global action to phase out coal, and devastating news of floods and wildfires emerging almost daily, mitigating climate change is not a question anymore.

It’s important to understand which offset option to use. This ensures it’s really helping to halt the climate crisis. First, get to know the voluntary carbon market on a deeper level.

In this article you’ll learn:

🌿 The definition of the voluntary carbon market

🌿 Why the voluntary carbon market matters

🌿 Who it’s for and what to look out for

🌿 How the voluntary carbon market differs from a mandatory one

PS: If you want to brush up your knowledge on carbon first, read our Carbon Explained: All You Need To Know About Carbon Dioxide post.

What is the voluntary carbon market?

There are many different definitions of what the voluntary carbon market is.

There are ones that are long and packed with complicated words all jammed into one sentence. Like these:

The voluntary carbon market allows carbon emitters to

• offset the unavoidable greenhouse gas emissions by buying carbon credits from different projects that either remove or reduce greenhouse gases from the atmosphere

The voluntary carbon market also allows individuals, companies, or governments to

• purchase greenhouse gas or carbon credits to offset their emissions by financing the avoidance or reduction of emissions from other sources

A simpler definition of the voluntary carbon market:

🌿 The voluntary carbon market is a way for any carbon emitter to offset their emitted carbon.

Through emissions trading in carbon markets, individuals, companies, and governments can move towards carbon neutrality.

Who is the voluntary carbon market for?

The voluntary carbon market is for any carbon emitter who wants to offset their emitted carbon like mentioned above.

It’s a good way to move towards a more sustainable future.

It can serve companies, individuals, or governments who want to:

• achieve ambitious climate goals
• show social responsibility
• reduce carbon footprints
• push back World Overshoot Day
• reach a zero-emission status or carbon neutrality

Companies can benefit by establishing a healthy and green corporate image. They can go about it in two ways: individually or as a part of an industry-wide scheme.

However, there have also been cases of unethical usage:

• Greenwashing
• Shady programs where it’s not clear how the offsetting works

Some companies have used voluntary carbon offsetting as a cover. They claim they’re making conscious decisions when, in reality, they emit more and more carbon.

Do your research and look for companies that are transparent about their actions and which carbon offset scheme they’re using.

Why is the voluntary carbon market important?

The voluntary carbon market was formed to drive finance towards activities that reduce greenhouse gas emissions.

The aim of the voluntary carbon market is similar to the mandatory market’s one:

• reduce carbon emissions
• meet the goal of the Paris Agreement

The voluntary carbon market is viewed as an important component in the global effort of mitigating climate change: it’s a market-based approach that aims to control greenhouse gas emissions.

What do I need to know about the voluntary carbon market?

It’s important to know how the voluntary carbon market differs from mandatory ones.

The voluntary market is a part of the global carbon market but it:

• Is different from compliance schemes under the Kyoto Protocol and EU Emissions Trading System
• Doesn’t need to undergo national approval from project participants
• Doesn’t need the approval of the registration and verification process from the United Nations Framework Convention on Climate Change

On the contrary, the calculation and certification process of the emission reduction is implemented per industry-created standards.

The voluntary carbon market is growing rapidly. In 2020, there was a record-breaking volume of standards issued. However, it’s still smaller than the mandatory one.

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