Voluntary carbon markets (VCMs) are a way for governments, industries, and individuals to reduce, avoid, and remove greenhouse gas emissions in order to reach net zero and meet climate change targets. These markets incentivize projects that contribute to sustainable development goals and provide co-benefits beyond carbon reduction.
VCMs operate differently from regulatory compliance markets, which are driven by policy or regulatory requirements. Instead, VCMs rely on self-regulating standard-setting organizations and certifiers to set competitive standards for project approval. Approved projects are listed on a VCM registry and monitored throughout the crediting period, with credits issued based on the amount of carbon dioxide equivalent that is reduced, avoided, or removed from the atmosphere.
While VCMs have faced obstacles in their early years, such as lack of transparency and standards, they have become more refined over time. In 2015, government leaders recognized the need for transparency and global standardization within VCMs and worked towards establishing the Paris rulebook, which provides a framework for project activity standards and fosters transparency between project developers and VCMs.
The most established VCM registries include Verified Carbon Standard (VCS), Climate Action Reserve (CAR), American Carbon Registry (ACR), and Gold Standard. These registries have competitive applicability conditions that projects must meet before and throughout the crediting period.
VCMs encourage a variety of project activities, such as changes in agricultural practices and afforestation, to achieve net zero. Additionally, VCMs promote the inclusion of co-benefits and sustainable development goals by providing additional credits when these are incorporated. Co-benefits can include environmental, economic, and social benefits, while sustainable development goals encompass specific types of co-benefits.
VCMs have the potential to be a force for good in addressing the climate crisis by providing offset solutions to major polluters. For example, Verra, a prominent VCM, has issued over 1.1 billion verified carbon credits through various project activities around the world. These credits have been used in over 88 countries, including projects related to transportation emissions, such as the installation of electric vehicle charging stations.
As VCMs continue to adapt and refine their standards, they incentivize government, industry, and individuals to change their behavior and drive innovation towards achieving net zero emissions.
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