Information and analysis is essential for any market. Up-to-date data and analysis will give buyers and sellers, as well as project developers and policymakers necessary signals for making important decisions. Between 2007 and 2017 (the last year for which data on total annual market activity is available) the VCS has consistently been the most commonly transacted offset project standard. Information about VCS projects, as well as Verified Carbon Unit (VCU) issuances and retirements is a critical indicator of market activity and we are excited to announce that we will make information about these trends available on a regular basis going forward.
Please find below the inaugural issue of our “Data and Insights” quarterly update. It includes historical information about VCU issuances and retirements as well as the more recent trends (2018 and 2019). Future issues will include brief commentaries on noteworthy developments in the market. We welcome feedback and suggestions!
*One VCU represents one tonne of carbon dioxide equivalent that was removed from the atmosphere or not emitted.
ALM – Agricultural Land Management
ARR – Afforestation, Reforestation and Revegation
IFM – Improved Forest Management
REDD – Reducing Emissions from Deforestation and Forest Degradation
WRC – Wetland Restoration and Conservation
Climate change and the urgent need for increased mitigation and sequestration took center stage in 2019. From the protests led by Greta Thurnberg to rising media attention on the ‘flight shame’ movement — the world appears to be waking up to the problem — though we still have a long way to go. Voluntary corporate and individual offsetting is rapidly increasing as a result.
This trend is reflected in the data above which indicate robust growth in VCU issuances across the board in 2019. This is likely the result of increased demand from companies and individuals looking to offset their carbon footprint.
We’re also seeing an increase in pre-compliance demand, as airlines eye the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), whose voluntary pilot phase is to take effect in June of 2021, and emerging carbon pricing approaches in countries around the world.
In addition, we note a distinct increase in VCUs originating from AFOLU (Agriculture, Forestry and other Land Use) projects. Natural climate solutions hold tremendous potential to contribute to the climate goals under the Paris Agreement (see this study). Activities in the land-use sector offer dynamic opportunities not only to reduce emissions and sequester additional carbon, but also to provide real, tangible benefits to people and the planet by contributing to the Sustainable Development Goals (SDGs); and these projects and programs have also taken center stage in many corporate offset strategies.
While 2020 offers a fair amount of uncertainty with respect to the evolution of market — with Article 6 hopefully being agreed on at the COP25 in Madrid, CORSIA finalizing its first round of approved programs in March and a range of domestic systems evolving (such as the new carbon tax and offset policy in South Africa) — we expect it to be another exciting year in climate change policy and markets.