NEW YORK, NY — The value of the voluntary carbon market shrunk 47 percent to $387 million in 2009 as the recession shrank the amount of offsets purchased for corporate social responsibility purposes.
Transactions for the year equaled 94 million tons of carbon dioxide (CO2) emissions reductions, a 26 percent decline from 2008, despite growth in emissions reductions bought for pre-compliance purposes, according to "Building Markets: State of the Voluntary Carbon Markets 2010." The fourth annual report, released Monday, was produced by Ecosystem Marketplace and Bloomberg New Energy Finance.
"The economic recession had a marked impact on the part of the market primarily concerned with buying credits to offset emissions of companies and individuals," Milo Sjardin, Bloomberg New Energy Finance Director and report co-author, said in a statement. "In contrast, expectations of a possible U.S. carbon trading program lifted the importance of the U.S., which figured as the largest buyer and seller in the market and the most popular transactions were those that could count towards future compliance. However, with the current state of play of U.S. politics this situation is likely to be very different this year.”
The average cost for an emissions reduction was $6.50 per ton of CO2-equivalent. Projects that destroy potent methane proved to be the most popular, comprising 41 percent of all voluntary transactions, followed by forestry at 24 percent, and renewable energy projects, at 17 percent.
About 56 percent of emissions reductions originated in projects in the U.S., followed by Latin America and Asia. The U.S. accounted for 49 percent of voluntary offset demand.
The use of independent, third-party registries to track ownership of emissions reductions nearly doubled, mostly caused by the roll-out of the Voluntary Carbon Standard's meta-registry, which uses multiple registries across several regions.
The authors warn that figures in the report are likely conservative because of the inherent challenges in trying to inventory and collect data. More than 200 offset suppliers, exchanges and registries voluntary reported the data used in the report.
Image CC licensed by Flickr user nemesisnom.