Introduction

Reducing greenhouse gas emissions has become a global priority in recent years, and the voluntary carbon marketplace plays an important role in achieving this goal. In this article, we will explain what the voluntary carbon marketplace is and the benefits it offers to enterprises participating in voluntary carbon marketplace.

What is Voluntary Carbon Marketplace(VCM)?

The voluntary carbon marketplace is where usually companies and organizations can purchase carbon credits that are not regulated by government-mandated emissions reduction schemes. These carbon credits are generated by projects that reduce or remove greenhouse gas emissions, such as renewable energy and reforestation projects. These credits can be purchased by enterprises to offset their own emissions and promote sustainable practices. Carbon credits are verified through some reputable carbon projects registries with certification processes, such as Verra(Verified Carbon Standard) and the Gold Standard, ensuring the carbon credits are of high quality.

Voluntary Carbon Market vs Compliance Carbon Market

Carbon markets are divided into two segments:

1. Compliance carbon market
2. Voluntary carbon market

The mandatory(compliance) markets allow governments, enterprises, and other organizations to purchase carbon credits in order to comply with caps on the amount of greenhouse gases they are allowed to emit. The markets are created by national and international treaties such as the Kyoto Protocol and the EU Emissions Trading Scheme. On the other hand, voluntary carbon credits are significantly more fluid, unrestrained by boundaries set by nation states or political unions. They also have the potential to be accessed by every sector of the economy instead of a limited number of industries. As Hong Kong has no compliance market now, voluntary market is the best way for enterprises to start exploring international carbon credit projects.

Benefits for Enterprises to Join

1. Offsetting Emissions: Purchasing high-quality carbon credits to offset their emissions from operations, products, and services while promoting sustainable practices.
2. Sustainability Leadership: Demonstrating sustainability leadership and enhancing brand value. Enterprises can show their commitment to responsible environmental stewardship, differentiate themselves from competitors, and attract environmentally conscious customers and investors.
3. New Revenue Streams: Access to new revenue streams through the sale of carbon credits generated through emissions reduction projects. This can provide a new source of income and contribute to the financial viability of sustainability initiatives.
4. Competitiveness and Cost Savings: Increased competitiveness and cost savings through emissions reduction measures and carbon offsetting.
5. Access to Expertise: Accessing expertise and resources from stakeholders, including standards and certification bodies, project developers, and intermediaries like brokers and registries. This helps navigate the complexities of the market and maximize participation benefits.

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References:

• Article from S&P Global Commodity Insights:
  Voluntary Carbon Markets Pricing, Participants, Trading CORSIA Credits
• Article from McKinsey:
  A Blueprint for Scaling Voluntary Carbon Markets