Voluntary carbon credits, which are also referred to as offsets, are financial tools issued by project developers that avert or remove GHG emissions from the atmosphere. Such offsetting schemes are ‘voluntary’ and unregulated, unlike ‘compliance’ markets such as the EU’s Emission Trading System (ETS), with legal obligations and public interventions to push prices up. It works by purchasing carbon credits aimed at averting greenhouse gas emissions or permanently removing them from the atmosphere – typically by planting trees, the most popular type of offset project.
So, voluntary carbon markets allow corporate leaders to offset carbon emissions that can only be reduced at a high cost or to offset unavoidable emissions. These voluntary carbon markets have recently attracted a growing number of entrants such as oil companies alongside companies like Alphabet or Disney, which have been using carbon offsetting for many years. In the absence of mandatory carbon schemes, they can participate in voluntary carbon markets. That’s precisely where offsetting schemes could play a role in achieving a company’s voluntary climate objective: neutralising residual emissions that are still deemed unavoidable today until a technological alternative becomes available on the market. In some of these industries, particularly outside the power sector and manufacturing, the cost of reducing emissions with today’s technologies might be prohibitively expensive or impossible. They too want to make their businesses more sustainable, and an increasing number is committing to net-zero emission strategies. We unravelled the economics of these schemes and why they matter for corporate decision-makers here.īut many companies are not part of mandatory carbon pricing schemes, like retailers, wholesalers, contractors, carriers, farmers. Why carbon offsetting makes sense for corporate decision-makersĬurrently, most mandatory carbon pricing schemes, like the EU Emissions Trading System, apply to the power sector and manufacturing.
0 kommentar(er)
