Governments Embrace Carbon Voluntary Market

A growing number of national and regional governments are likely to use voluntary carbon credits to meet mandatory climate targets, a report by U.S. research company Ecosystem Marketplace said on Thursday.

The report said about 20 government programs had engaged with the voluntary carbon market, despite doubts by some companies, green groups, policymakers and consumers that carbon credits are an appropriate means of offsetting emissions.

"In a few short years, governments have shifted from skepticism to acceptance of the voluntary carbon offset market as a valid complement to regulation," said Ecosystem Marketplace's carbon program manager Molly Peters-Stanley.

She added: "Some voluntary programs are even writing the rules for regulated carbon markets as governments outsource a growing list of market functions to independent bodies - leaning on their accumulated experience with carbon offset projects."

The report, which surveyed measures in 13 regional and national governments, said three jurisdictions - California, British Columbia and Oregon - use offsetting tools that were developed originally for non-mandatory measures by companies to shrink their carbon footprints.

Meanwhile, Costa Rica, South Korea and South Africa aren't far behind North American regional governments in using non-compliance offset standards, Ecosystem Marketplace said.

South Africa has indicated it could consider allowing offsets of voluntary origin for use under its proposed carbon tax, the report added.

Governments had moved beyond their traditional role of providing oversight for voluntary programs and are now certifying projects, developing methodologies, registering offsets and educating buyers, the Washington D.C.-based research company said.

Besides setting up trading programs to support companies and individuals seeking to offset emissions, governments are using carbon trading as a regional compliance tool, the report added.

Several of the national governments profiled are also participants in the World Bank's new Partnership for Market Readiness, a capacity-building trust fund designed to assist developing countries that wish to take on GHG reduction targets, Ecosystem Marketplace said.

An apparent warming in attitudes towards the voluntary carbon market in the Americas and Asia contrasts with Europe, where policymakers at EU level have been long wary of some types of offsets, particularly those from forestry, which are banned for compliance use in the EU's Emissions Trading Scheme.

Last year, the U.N. acknowledged the growth of different voluntary and compliance offset markets around the world and said it would scrutinize the way it the world's biggest compliance offset market, the Clean Development Mechanism, operates in a bid to avoid a fragmented market.

Ecosystem Marketplace said last year the voluntary carbon sector was likely to have grown in 2011 despite weak economic conditions.

The research company is expected to update its overview of the voluntary market in late May.

(Reporting by John McGarrity)