10TrendsCarbonMarketExpertsareTalkingAboutRightNowHalfwaythrough2023,we’relookingatwhat’shappeninginthevoluntarycarbonmarkets,andwherewe’reheaded.Introduction:Themarketinflux1.Smallsetbackshaveoccurredagainstthebackdropofsteadymarketgrowth.2.Corporatebuyersareparticipatingina‘flighttoquality.’3.Technologyisworkingtounlockgreatersuppliesofhigh-qualityprojects.4.Corporatesarefocusingon‘investing’over‘buying.’5.Carboncreditsshouldcome‘last,butnotlater.’6.Companiesaregoingbeyondoffsetting7.Buyersanddevelopersarepushingformoreequitableapproachestocarbonprojectdevelopment.8.Standard-settersareworkingonbetter,moreconsistentcorporateguidance.9.Thevoluntarymarketislayingthefoundationsformandatoryregulation.10.Thevoluntarycarbonmarketisstillgrowing.Conclusion34681012151820222526TableofContents10TrendsCarbonMarketExpertsareTalkingAboutRightNowIntroduction:Themarketinflux310TrendsCarbonMarketExpertsareTalkingAboutRightNowWearejusthalfwaythroughwhathasalreadybeenasignificantyearforthevoluntarycarbonmarkets(VCM).Changeisvisibleeverywhere:newclimatedisclosureregulationsarecomingonlinearoundtheworld,furtherguidanceisbeingdevelopedandissuedbymarketbodiesliketheIC-VCMandVCMI,andthemarkethasreceivedanunprecedentedamountofmainstreammediaattention.Thesechangeshavecausedmovementandconfusioninthemarket,leavingmanywould-bebuyershesitanttogetinvolved.Buttheneedforcarbonprojectfundinghasneverbeenmorecritical.Sylvera’srecentCarbonMarketsSummitbroughttogethercarbonmarketleadersfromaroundtheworldtodiscussthecurrentstateofandfuturepossibilitiesforthecarbonmarket.Thisexpertguide,producedbySylveraandPachama,reflectsonthetoptentrendsthesecarbonmarketexpertsseein2023andbeyond.We’llexplorerecenteventsandtheireffectsonthemarketandmakesomepredictionsaboutwhattoexpectdowntheroad.Weaimtoreducesomeoftheuncertaintymanycorporatebuyersarefeelingand—hopefully—unlockthecriticalfundingtheworldneedstoreversethetrajectoryofclimatechange.Sylveraprovidestrustedcarbondataforrealclimateaction.Discoverhigh-qualitycarboncreditswiththemostaccurateandin-depthratingsandanalytics.LearnmorePachamaharnessessatellitedataandartificialintelligencetohelpcompaniesconfidentlyinvestinhigh-qualitycarboncredits.LearnmoreTherapidgrowthincarbonmarketsoverthepastfewyearssloweddownin2022.Weattributethistoayearofunusualgeopoliticalandeconomicturmoilandseeitasoneofmanyto-be-expected‘growingpains’ofanemergingmarket.Yetdespiteaslightdecreaseinnewsupplyandtransactionsovertheyear,retirementsheldsteady,indicatingthat,forthemostpart,corporatesarestillbullishabouttheuseofcarboncreditsintransitionstrategies.Retirementsfrom2023areontracktoexceedprioryears1.Despiteglobalconditions,carbonmarkets—bothvoluntaryandcompliance—haveproventheirresilience.Thefirstquarterof2023sawthepricesofnature-basedsolutions(NBS)slowdowninresponsetonegativepresscoverageonNBScreditquality.REDD+pricessawaparticularlysharpdeclineuntilAprilandhavenowbeguntorecover.Mediaattentionhasledtobroadrecognitionthatsomelegacycreditshavequalityandmethodologyissues.Still,themarketsetbackshavebeentemporary,limitedinscope,andbynomeansindicatemarket-wideabandonment.Ratherthanturnbuyersawayenmasse,themediascrutinyovercarbonmarketshashighlightedwhatmanyontheinsidehaveadvocatedforyears:greatertransparency,integrity,andhighervolumesofqualitycarbonprojects.410TrendsCarbonMarketExpertsareTalkingAboutRightNow1.Smallsetbackshaveoccurredagainstthebackdropofsteadymarketgrowth.¦¬Source:TroveIntelligence,datapulledJune1,2023Source:publiclydisclosedregistrydataCarboncreditretirementvolumesCryptoOtherretirementsRetiredvolumes(millioncredits)Year04080160120‘10‘11‘12‘13‘14‘15‘16‘17‘18‘19‘20‘21‘22DiegoSaezGilCEO&Co-Founder,Pachama510TrendsCarbonMarketExpertsareTalkingAboutRightNow“We'veseenabifurcationinthemarketbetweenlegacy,low-qualityprojectsandanewgenerationofhigh-qualityprojects.Theformerarestartingtobeinterpretedasunusablebythevariousframeworkscompaniesfollowedtomakeclaims,whilethelatteraregoingtobecompliantwiththeseframeworks.”AboutDiegoSaez-Gilisaclimate-techentrepreneur,Founder&CEOofPachama,astartupwiththemissionofrestoringnaturetosolveclimatechangebyharnessingAIandsatellitedatatomonitorandfinanceeffectivereforestationandnatureconservation.Thecompanyhasraisedmorethan$80MfromsomeofthetopclimateinvestorssuchasBreakthroughEnergyVentures(BillGates’climatefund),LowerCarbon,AmazonClimatePledgeFundandYCombinator.DiegohasbeenselectedasTechnologyPioneerbytheWorldEconomicForumandhasbeenawardedasInnovators35Under35bytheMITTechnologyReview.HiscompanyPachamahasbeenawardedastheMostInnovativeAICompanyof2021byFastCompanyaswellasAI50for2023byForbes.Diegoisaserialentrepreneurhavingco-foundedBluesmartandWeHostels,twotravel-techcompaniesacquiredbymajorindustryleaders.DiegostudiedentrepreneurshipatStanfordGSBandprojectmanagementatLaSalleUniversityinBarcelona.DiegowasborninTucumán,Argentinaandisalifelongecologistandseeker.2.Corporatebuyersareparticipatingina‘flighttoquality.’610TrendsCarbonMarketExpertsareTalkingAboutRightNowRecentmediaattentionhashighlightedtheneedforstronger,moreconsistentcarboncreditingmethodologies,alongwithmorethoroughduediligenceonthepartofbuyers.Tothisend,themarkethasrespondedpositively—weareseeinganaccelerating‘flighttoquality,’withbuyersbecomingincreasinglydeterminedtoinvestinhigh-qualitycarboncredits,bothtoavoidthepotentialforgreenwashingaccusationsandtomaximizetheenvironmentalimpactoftheircarbonbudget.Expertsrefertothistrendas‘buyingbrand’—buyinghigh-qualityprojectswhoseimpactandreputationcanbeinfusedwithabuyer’sbrandidentity.Carboncreditsarebecominghighlypublicizedinvestmentsthatcorporatebuyersareproudtosharewiththeircustomersandstakeholders.Thisiswhyqualityisbecomingakeyconcernforbuyers—theriskofinvestinginlow-qualitycarbonprojectsthatmaypubliclyfailisnotjustenvironmentalbutalsoreputational.Thisgreaterfocusoncreditqualitycomesatatimewhentechnologyisbecomingmorecapableofvalidatingcarboncreditquality.Today,wecanemploysatellitesforremoteforestsensingandground-levelinsights,computedynamicbaselineswithartificialintelligence,andgivebuyersaccesstodetailedandup-to-datecarboncreditratingsandanalytics.Sowhiletechnologyisbeingemployedtoidentifyhigh-qualitycarbonprojects,somebuyersarefacingtherealityoftheVCM’sinelasticsupply.PeterReinhardtCEO&Co-Founder,CharmIndustrial“Inmanycases,whatyou'rebuyingissomekindofbrandaffinityandtrust,andtheabilitytosay‘I'mdoingsomethingaboutthis.’Andthatmeansthat[buyingcarboncredits]isdifferentthanbuyingotherthings.Thebuyerisinterestedinactuallytalkingabouttheirpurchase,announcingit,whathappenspost-announcement,andbeingabletostandbehinditandshowthatit’sreallyhavinganimpact.They’rebuyingbrand,tosomeextent.”SamuelGillCo-founder&President,Sylvera“Thesophisticationwithwhichwecanquantify[projectquality]isdeveloping.Andmovingforward,wehaveahugeamountoftechnologythatwecanleveragetotightenupprojectquality.Mysenseisthatregulationwilltighten,butitwillbepushingouttheprojectsthatwealreadyknowarelow-quality.Developersshouldbeshiftingtowardsdefinitionsof‘high-quality’thatarealreadyavailable–andthesetoolsnowexist.Thepillarsofqualityareveryclear.”SophiePurdomManagingPartneratPlaneteerCapital&Co-Founder,CTVC710TrendsCarbonMarketExpertsareTalkingAboutRightNow“Mostfolkswouldagreethatthere’sbeenaflighttoqualityhappeninginthemarket.[Forexample],ratherthanbuying100lower-qualitycreditsthatremove100metrictonsofCO2onpaper,corporatesareshiftingtobuying10higher-qualitycarbonremovalcreditsforthesameprice.”AboutSophiePurdomisManagingPartneratPlaneteerCapital,anorganisationinvestinginandsupportingearly-stageclimatetechfounders.SheisalsotheCo-FounderofClimateTechVC,aleadingsourceonthenewclimateeconomythatprovides50,000+investorsandoperatorswithafreshperspectiveanddata-drivenprojectionsabouttheevolvingworldofclimateinnovation.Prior,Sophieworkedasasustainablebusinessoperator;firstlaunchinganESGfundatamajorendowment,followedbyafewyearsatBain&Co..ShehasalsopublishedabookonsustainableinvestingandhelpedfoundKulaBio,anagriculturaltechnologycompanythatmakescarbon-negative,low-costammoniafertilizerwithmicrobes.3.Technologyisworkingtounlockgreatersuppliesofhigh-qualityprojects.TheVCM’srecentflighttoqualityhasrevealedthelimitednumberoftrulyhigh-qualitycarboncreditsonthemarket.Whiledemandcanchangequickly,problemsofsupplyincarbonmarketstakealongtimetocorrectduetoanumberofreasons.Firstly,carbonprojectsarecomplex.Evennature-basedsolutionsrequiresignificantamountsofcapital,technicalexpertise,andon-the-groundrelationshipstogetstarted.Legalnegotiationsandscientificprepworkcanmeanthatprojectstakeyearstoreceiveagreenlight.Andevenwithadequatefundingandlandowneragreementsinplace,carbonprojectstypicallywon’tbeginsequesteringcarbonformanyyears.Theselonglead-intimesandthedifficultyofgettingprojectsoffthegroundcontributetotheinelasticityoftheVCM’ssupplyside.Forthepastfewyears,andlikelyformanymoretocome,thepaceatwhichdemandisrisingwilloutstripthegrowthofnewsupply.OrganizationslikeSylveraandPachamaareworkingtoovercomesupplyissuesinseveralways.Forexample,PachamausessatellitedataandAItechnologytoassessthepotentialforlanduseincarbonprojects.Todate,therehasbeenhighinterestfromlandownersintheGlobalSouthtoenrolltheirlandincarbonprojects.Thedifficultpartfortheseownerswasknowingwheretostart—howtojoincarbonprojectsandwhethertheirlandwouldqualify.810TrendsCarbonMarketExpertsareTalkingAboutRightNowJustinCochraneDirector&CEO,CarbonStreamingCorporation“Oneofthebiggestconcernswestartedhearingfrombuyersseveralyearsagowastheworrythattherewasn'tgoingtobeenoughhigh-qualitysupplyofcreditstomeettheirneeds.”DiegoSaezGilCEO&Co-Founder,Pachama“Treestaketimetogrow,right?Andforareforestationproject,you’llstarttoseeameaningfulstreamofcarbonsequestrationthatcanbecertifiedgenerallyinyearfour,five,orsix.Andtherealvolumewillcomeevenlater.”Traditionally,landownersmightengageconsultantstodeterminetheeligibilityoftheirland,aprocessthatcantakemonthsorevenyears.ButthroughacombinationofsatellitedataandAItechnology,Pachamaisbuildingmodelsthatwillbeabletodeterminealmostinstantlywhetheralandowner’spropertyiseligibleforcarboncrediting.Thistechnologywillenablethemtostarttheirjourneystowardscarbonsequestrationimmediately,reducingtimetomarketandopeningupwhathasbeenasignificantbottlenecktosupplyvolumes.Technologyisonepieceofthesupplypuzzle,butfinancingisanother.Sincecarbonprojectsrequiresubstantialfundingupfront(typicallylongbeforecreditscanbeissued),it’simportantthatcorporatebuyers—andeventhird-partyinvestorsandfinancers—puttherightsignalsoutintothemarketanddemonstratetheirwillingnesstoinvestearlyonintheseprojects.910TrendsCarbonMarketExpertsareTalkingAboutRightNowContinued3.Technologyisworkingtounlockgreatersuppliesofhigh-qualityprojects.Source:Pachama4.Corporatesarefocusingon‘investing’over‘buying.’Securingquality,affordablefuturesupplywillrequirethatmorecompaniesinvestearlierinthecarboncreditingprocess—beforecreditscanevenbeissued.Early-stagefinancingiscriticalforgettingcarbonprojectsofftheground.Nature-basedsolutionsrequiresignificantresourcestocompensateforlanduseandinvestinthenecessaryactivitiesforscience-backedreforestation,conservation,andforestrymanagementefforts.Forexample,Pachama’ssamplecoststructuremodelforanactivereforestationprojectputsupfrontlandcostsat33-49%oftotallifetimecost.Addtothatthecostsrequiredfortreeplantingandqualifyingforregistryissuance,andthefirstfiveyearsofaproject’slifewillincur67-75%ofaproject’slifetimecost—yetcreditsareonlyissued(andrevenueonlygenerated)upto5-7yearsaftertreeplanting.Evenfortechnology-basedsolutionssuchasbiocharanddirectaircapture,sizeableupfrontinvestmentsarerequiredtogetthesenascenttechnologiestoremoveCO2atanappreciablescale.1010TrendsCarbonMarketExpertsareTalkingAboutRightNowDiegoSaezGilCEO&Co-Founder,Pachama“Thechallengeisreallyfinancing.Weneedmorefinancierstocomeearly.Wethinkit'sagreatfinancialopportunitytoinvestintheseprojectsthatwillhaveareturnwhenthecreditsareissued.Astheoldsayinggoes,‘thebesttimetoplantatreewas20yearsago;thesecondbesttimeisnow.’Wehavetostarttodaytosatisfythedemandthatiscominginacoupleofyears.”67–75%ofaproject’slifetimecostwillincurinthefirstfiveyearsofit’slife.67%75%It’sgoodnewsforcarbonmarketsthatthird-partyinvestorscanseethewritingonthewall:withsoaringdemandandalimitedsupply,early-stagecarbonprojectsarefullofinvestmentpotential.Corporatebuyerswhoarewillingtoinvestinearly-stageprojectstosecurequalityalsoneedtounderstandtheunderlyingrisk.Sylveraisworkingwiththesebuyerstoassessthequalityanddeliveryriskoftheseinvestmentsbyleveragingproprietarydatasetsandknowledge.It’snotjustorganizationsinthefinanceandinvestmentspacethatcangetinvolvedintheseearlystages.Forward-thinkingcorporatebuyersarealsomovingupstream,usinginitialfinancingofferstolockinfuturesuppliesofhigh-qualitycreditsatreasonableprices.Theseclimateleadersaredemonstratingthatthere’snoneedtowaittoinvestinhigh-impactcarboncredits.1110TrendsCarbonMarketExpertsareTalkingAboutRightNowShonaCrawford-SmithProductManager,Sylvera“We'reseeingmoreandmorepeoplemoveupstreamtosecurethesefutureopticsofqualitycreditsthattheycan'tfindonthespotmarkettoday.Soreally,qualityisfrontofmind,evenintheupstreamspace.”BrianDiMarinoGlobalHeadofOperationalSustainability,JPMorganChase&Co.“Thisconversationaboutmovingupstreamandinvestingversusjustbuyingdoesacoupleofthings.One,itgetsmoneytodevelopersearlyon,soitshowsourcommitmenttothemarketingeneral,andthatthisshouldgrowinscale.Two,itgivesusalittlebitofcontroloverwhat'sgoingonintheproject,becausewe'regettinginattheearlystages.Andattheendoftheday,wethinkit'stherightthingtodo.Sobuyersneedtobeoutinfrontofthemarket.”Continued4.Corporatesarefocusingon‘investing’over‘buying.’5.Carboncreditsshouldcome‘last,butnotlater.’Themitigationhierarchyencouragesemissionreductionsfirstandcarboncreditslast—butcompaniesleadingonclimatearedemonstratingthedifferencebetweenhierarchyandchronology:‘last’doesnothavetomean‘later.’Companiescanpurchasecarboncreditsthroughouttheirdecarbonizationjourneyssolongasthesepurchasesarenotusedinplaceofactualemissionsreductionsacrossthevaluechain.Indeed,scientistswarnthattheAmazonRainforest,whichservesasacriticalsourceofglobalcarbonremovals,isreachingatippingpoint:beyondwhichitcannolongerrecoverfromdecadesofdestructionandwouldbecomeanetcarbonemitterratherthanacarbonsink.ConservationInternationalexplainstheconceptof‘irrecoverablecarbon’—theimmensestoresofnature-basedcarbonthat,ifreleased,couldnotberestoredby2050,thedeadlineforavoidingtheworstimpactsofclimatechange.Theneedforfunding,bothforconservationandforreforestationefforts,iscritical.Mitigatingtheeffectsofclimatechangewillrequirethatcompaniesinvestincarboncreditsassoonastheycan—notwhentheyhaveachieved90%decarbonization(orothernear-termscience-basedtargets),butrather,assoonastheyhavesetscience-basedtargetswithclearplansforachievingthem.Companiesshouldconsideroffsettingresidualemissionsnotjustoncetheyhavereachedtheirdecarbonizationtargetsbuteveryyearalongtheway.1210TrendsCarbonMarketExpertsareTalkingAboutRightNowAlexiaKellyManagingDirector,CarbonPolicyandMarketsInitiative,ICVCM&HighTideFoundation“MyformercolleaguesatSalesforcecoinedatermwhenthinkingabouttheroleofcarboncreditsinacorporatedecarbonizationjourney,whichis‘last,butnotlater.’Ithinkthere’saverystrongphilosophicaldebaterightnowaboutwhenistheappropriatetimetousecarboncreditsonyourdecarbonizationjourney,andtherolethattheyplayindeliveringmaximumclimateimpactandambition.”1310TrendsCarbonMarketExpertsareTalkingAboutRightNowContinuedAnaHaurieCEO,RespiraInternational“About$44trillionofGDP,whichisabouthalfofglobalGDP,dependsonnature.Weneedtoprotectnature.It'sanincrediblyimportantfunctionforthewholeplanet.Deforestationaccountsfor10to15%ofglobalemissionseveryyear.Ifwekeepunderminingtheconfidenceinthissector,thisrateofdeforestationisgoingtocontinueincreasing.Sohowdowepreserveitandconserveitsothatitcankeepdoingthefunctionthatit'smeanttobedoing?ThisiswherewehavetolookatforestconservationandREDD+.”5.Carboncreditsshouldcome‘last,butnotlater.’Yetmanybuyershesitate,thankstoalong-standingnotionthatcorporationsusecarbonoffsetsasa‘licensetopollute.’Sylverarecentlyexploredthisconceptinourstudyof100ofthemostinfluentialcompaniesworldwide.TroveIntelligencealsoreleasedsimilarfindingsfromastudyofover4,000companies.Thecentralquestioninbothstudieswas:doesbuyingoffsetsslowcorporatedecarbonization?Andtheanswer,resoundingly,wasno.Bothstudiesrevealedthatorganizationsthatinvestincarboncreditsarecuttingemissionsattwicetherateoftheirnon-credit-buyingpeers.SowhatdoesthismeanfortheVCM?It’sclearthatthemarketneedsstrongerincentivesandclearerofficialguidancetoencouragecompaniestobeginoffsettingtoday—atthespeedandscaletheplanetrequires.Buyersneedreassurancefromstandard-settersthatinvestinginhigh-qualitycarboncreditswon’tdetractfromprogressoninternalemissionsreductions.“Organizationsthatinvestincarboncreditsarecuttingemissionsattwicetherateoftheirnon-credit-buyingpeers.”6.2%CompaniesthatbuycarboncreditsaresimultaneouslycuttingtheirScope1and2emissionsby6.2%peryear.3.4%Companiesthatdon’tusecarboncreditsarecuttingemissionsbyonly3.4%peryear.Sylverareport,2023AlexiaKellyManagingDirector,CarbonPolicyandMarketsInitiative,ICVCM&HighTideFoundation1410TrendsCarbonMarketExpertsareTalkingAboutRightNow“Ipersonallyfeelverystronglythatfindingstrongincentiveframeworkstoenablecompaniestoinvestnowandtodayinboththeirinternaldecarbonizationwhilealsoprovidingthatadditionalassuranceandincentivetospendthesignificantadditionalmoneythatwillberequiredinordertoinvestinhigh-qualitycarboncreditsasacredibleandrecognizedpartofyourdecarbonizationjourney.”AboutAlexiaKellyhasworkedformorethan17yearsattheintersectionofpolicyandfinancetoaddresstheclimatecrisis.AlexiacurrentlyservesasManagingDirectoroftheCarbonPolicyandMarketsInitiative(CPMI)atHighTideFoundation.TheCPMIacceleratesambitiousclimateactionandcapitalmobilizationthroughrobustrulesandguidanceforvoluntarycorporateactionanddisclosures,andbybuildingthenextgenerationofhigh-integritycarbonandenvironmentalservicesmarkets.InthisrolesheservesontheBoardoftheIntegrityCouncilforVoluntaryCarbonMarkets(ICVCM)andontheBoardoftheAdvancedandIndirectMitigationInitiative,aswellasontheExpertAdvisoryGroupoftheVoluntaryCarbonMarketsIntegrityInitiative(VCMI).PriortojoiningHighTideFoundation,sheservedasDirectorofNetZero+NatureatNetflix,wheresheledthecompany’sinauguralgreenhousegasinventory,renewableenergystrategy,ScienceBasedTargetandglobalcarboncreditportfolio.Previously,sheworkedattheU.S.DepartmentofState,wheresheservedasleadnegotiatortotheUNFCCConArticle6oftheParisAgreement.ShehasalsoheldseniorrolesattheWorldResourcesInstitute,TheDavidandLucillePackardFoundation,TheClimateTrust,andinprivateequity.6.CompaniesaregoingbeyondoffsettingDespitethewealthofcompaniesinvestingincarboncreditstocreategenuineclimateimpact,thereisstillwidespreadskepticismabouttheeffectivenessofcarboncredits.Partofthisreputationstemsfromframingcarboncreditsascarbon‘offsets’,atermthatseemstoimplythatcarboncreditpurchasesabsolvebuyersoftheneedtoreduceemissions.Adjacenttothisistheuseoftermslike‘carbonneutral’whenmarketingparticularproductsandservices,whichcangiveafalseimpressionthataproductmakesnonegativeenvironmentalimpact.Astheuseofcarboncreditscomesintoquestionandmorecompaniesunderstandtheimportanceoffollowingmitigationhierarchiesintheirdecarbonizationjourneys,standard-settersareencouragingcompaniestomoveawayfromthinkingofcarboncreditsas‘offsets.’TheSBTihasissuedclearguidancearoundthevaliduseofcarboncreditsfor‘BeyondValueChainMitigation’(BVCM)andhasmoreguidancecomingin2023.InvestinginBVCMshiftsthefocusawayfromoffsettingcorporatefootprintstowardtheopportunitiesforlarge-scaleclimateimpact.1510TrendsCarbonMarketExpertsareTalkingAboutRightNowScarlettBensonBeyondValueChainMitigationLead,ScienceBasedTargetsInitiative(SBTi)“I'mworkingwiththeSBTitoprovidebestpracticeguidanceonwhatBeyondValueChainMitigationlookslike.Mitigatingbeyondthevaluechainisnotasubstituteforin-value-chaindecarbonization.It’saboutgoingaboveandbeyond.”Partofthemovefrommitigationtocontributioninvolvesshiftingfromabinary,carbon-in-carbon-outmindset.Morecorporatebuyersareapproachingcarboncredits,particularlynature-basedsolutions,aswaysnotjusttoneutralizeresidualGHGemissionsbuttomakeanet-positiveenvironmentalimpact.TheupcomingreleaseoftheTNFDrecommendationsinSeptember2023andtheUnitedNations’COP15BiodiversityConferenceinDecember2022putaspotlightonthemyriadnon-carbonbenefitsofconservationandreforestationefforts.SomecompaniesaresettingenvironmentalcommitmentsoutsideofGHGemissions,suchasnatureandbiodiversitygoals,watergoals,andmore.Beyondnaturebenefits,manycarbonprojectco-benefitsemphasizethe‘social’elementofESGthroughtheirsupportoflocalcommunities.Donewell,carbonprojectscanoffersustainablesourcesofincomeforlocalresidentsthroughregenerativeharvestingandeco-tourism;improvelocalecosystemsandwaterways;createeducationalopportunitiesandhelpresidentsformlasting,emotionalbondswithnature.1610TrendsCarbonMarketExpertsareTalkingAboutRightNowBaronessBryonyWorthingtonHouseofLords“Peopleareacknowledgingthattherearemanymoreattributestoacarboncreditthanjustthetonnage.Theoldadagethatalltonsareequalisjustnottrue.Everytonhasattributes—itslocation,itsgeography,whatit'sdisplacing.Ithinkwherewe'removingtoisthatthere'snowmuchmorefocusonthiskindofmulti-attributeassessment.”Continued6.CompaniesaregoingbeyondoffsettingTraceyOsborneAssociateProfessor,UniversityofCalifornia,Merced1710TrendsCarbonMarketExpertsareTalkingAboutRightNow“Becauseofsomeoftherecentcritique[ofcarboncredits],there'salotmoreattentiontotransparencyandintegrity…andalsodiscussionsaboutbiodiversityandotherco-benefitsofsupportinglocalandindigenouspeoples.”AboutTraceyOsborneistheFoundingDirectoroftheUniversityofCaliforniaCenterforClimateJustice.ShealsoservesonthefacultyasAssociateProfessorintheManagementofComplexSystemsDepartmentattheUniversityofCalifornia,Merced.Traceyisaninterdisciplinaryscholarwhoseresearchfocusesonthesocial,ecologicalandpoliticaleconomicdimensionsofclimatechangemitigationintropicalforests.Sheisanexpertonclimatefinance,carbonmarkets,globalenvironmentalgovernance,andclimateequityandjustice,withparticularattentiontotheroleofIndigenousPeoplesandLocalCommunities.Alongwithherteam,shehasco-developedauniquehigh-integritycarbonprojectwithIndigenouspartnersintheEcuadorianAmazonbasedontheirknowledge,cosmovision(worldview),andtraditionalforestgovernanceandlandusepractices.Sheisalsoleadingateaminthedevelopmentofanewcertificationforhigh-qualityclimate/biodiversityprojectsthatareco-developedwithandprovidesignificantbenefitstoIndigenousandlocalcommunities.TraceyisamemberoftheGlobalClimateLeadershipCouncil,abodythatadvisestheUniversityofCalifornia’sPresidentonthesuccessfulimplementationofUC’sCarbonNeutralityInitiative.ShehaspublishedarticlesinhighimpactenvironmentalandgeographyjournalsandservesontheboardsofAmazonWatchandOneEarth.ShereceivedherPhDfromtheEnergyandResourcesGroupattheUniversityofCalifornia,Berkeley.7.Buyersanddevelopersarepushingformoreequitableapproachestocarbonprojectdevelopment.Alessbinaryapproachtocarbonprojectsisalsomoresociallyawareandequitable.Manyoftheworld’scarbonprojectstakeplaceintheGlobalSouth.Withthemarketonlyunofficiallyregulatedbystandard-settersandregistriesandoftenlackingintransparency,buyersanddevelopersmustn'tsacrificesocialgoalsinthenameofenvironmentalprogress.Tothisend,market-leadingbuyersareworkingwithprojectdevelopersatthegroundleveltounderstandhowprojectswork,theco-benefitstheyoffertolocalcommunities,andhowwelllocalstakeholdersareengagedandinvolvedfromthebeginningofaproject.Thisisimportantnotjustfromasocialjusticeperspective—communityinvolvementisalsothenumberonefactorthatcanmakeorbreakthesuccessofacarbonproject.Thisiswherecarbonpricingcanbeputincontext.Buyersshouldbefocusednotjustonwhatthepriceofacarboncreditmeansforthembutalsoonwhatitmeansforthecommunitiesandlandownersinvolvedintheprojects.Corporatebuyersshouldnotaimtosecureatonofcarbonatthelowestpricepossible,butrather,atonofcarbonatapricethatensuresthatlocalcommunitiesandlandownershaveenoughincentivenottoconvertcarbonprojectlandforcarbon-emittingactivities.1810TrendsCarbonMarketExpertsareTalkingAboutRightNowBaronessBryonyWorthingtonHouseofLords“Ifyou'vegotahigh-valuecommoditymarketalreadyhappening,whetherthat'sranchingorplantationsorlogging,thenyouneedaveryhighpricetodissuade[landowners]fromdoingthat‘naturalmarket’todoingacarbonmarket.Ifthecarbonisn’tahighprice,it’sactuallydoingsomethingquiteinequitable,whichiskickingpeoplewhohavenomoneyofftheirland,andencouragingthemintothatmoreeconomicnaturalmarket.”highlowNumberofprojectsGlobalDistributionofIssuingCarbonProjectsTraceyOsborneAssociateProfessor,UniversityofCalifornia,Merced“Whatreallycameoutof[studyingcarbonprojects]istheimportanceoflocalcommunityandIndigenouslandusepractices,andtheimportanceofprovidingmoresupportanddrivingmorefinancetowardlocalcommunities,Indigenouspeoples,andalsomakingsurethatthepriceishighenoughtocompensateforthoseopportunitycostsofthelargercommodity.”Source:Sylverareport,2022Workingdirectlywithlocalcommunitiesandorganizationsisnotjustawaytoensurethesuccessofindividualcarbonprojectsandthenetbenefittolocalstakeholders—itmayalsobethekeytounlockingqualitysupplyatscale.1910TrendsCarbonMarketExpertsareTalkingAboutRightNowJustinCochraneDirector&CEO,CarbonStreamingCorporation“We'retryingtoworkdirectlywithprojectdevelopersgetclosetotheproject,toseethedirectimpactsontheground,bothatthelocalcommunitylevelatprotectingbiodiversity,andtheactivitiesthathelpmeettheUN'sSustainableDevelopmentGoals.Andwe'refindingthebuyerswantthesame—thebuyerswanttogetclosertothedirectimpactsthattheseprojectsarehaving.”DiegoSaezGilCEO&Co-Founder,Pachama“Wedon'twanttobetheonesontheground,doingtheworkthathastobedonebylocalorganizations.Thequestionis:canweactuallyempoweranewgenerationofprojectdevelopers?CanweturnNGOsandlocalcommunitiesandlandownersintoprojectdevelopers?We’rehopingtohelpunleashthousandsofnewprojectdevelopersaroundtheworld.”Thesocialandethicalnuancesofworkingwithlocalcommunitiesmustbefurtheraddressedbystandard-settersandpolicymakers.ButintheabsenceofconcreteregulationfortheboomingVCM,voluntarymarketbodiesareworkingaroundtheclocktoproducemoreguidanceforeagercorporatebuyers.TraceyOsborneAssociateProfessor,UniversityofCalifornia,Merced“Wereallywanttoseemorecoherenceacrosstheresultswe'relookingforonthegroundinawaythat'sequitable,withstatepolicies,andwithinternationalfinancemechanismsthataregoingtoallowforthemosteffectiveandequitableoutcomeontheground.Theroleofthestateandpolicyisreallyimportanthere.However,inalotoftheearlyexamplesofcarbonoffsets,wehaven'treallyseenthekindofthejurisdictionalstatepoliciesandevenjurisdictionalapproachesthatarereallypayingattentiontolocalandIndigenouslanduses.”7.Buyersanddevelopersarepushingformoreequitableapproachestocarbonprojectdevelopment.Apositivesideeffectoftheincreasingfocusonequitableapproachesisthatmorebuyersarelookingtogetclosetotheircarbonprojects'directimpactsontheenvironmentandcommunities.Continued8.Standard-settersareworkingonbetter,moreconsistentcorporateguidance.Afraidofbeingcalledoutforgreenwashingovertheircarboncreditinvestments,manycorporatebuyersaredelayinginvestmentsuntilclearerguidanceisreleasedfromstandard-settersandindustrybodies.Butasmorecompaniespushforgreatertransparencyandaccountabilityfromstandard-setters,othersareexpressingconcernaboutthepotentialforfragmentationinthemarket.TheprimaryconcernisthattheguidelinesandstandardsreleasedbydifferentorganizationswillcreateevenmoreconfusionintheunregulatedVCMandfurtherblockactionatscalefromcorporatebuyers.2010TrendsCarbonMarketExpertsareTalkingAboutRightNowMarkKenberExecutiveDirector,VCMI“We'reseeingnewpolicyinitiativesinEuropeandelsewhere,tryingtoregulatewhatclaimscanbemade.Ourfear,backedupbysomeevidence,isthatcompaniesareinawayshutoff—sometimesshyingawayfromtakingaction—bothondecarbonizationandtheuseofcarboncredits,becausetheydon'tunderstandwhattheycanandcan'tdo.They'reworriedaboutsayingsomethingthatwillbejudgedinthecourtofpublicopinion,eveniftheyarealreadyclearlyleadersinthespace.SotheVCMI’sgoalisbothtocutoutthegreenwash,butalsogiveconfidencetothosewhoaredoingtherightthingthattheycansaysopublicly,andberewardedforit.”AlexiaKellyManagingDirector,CarbonPolicyandMarketsInitiative,ICVCM&HighTideFoundation“Asaformercorporatepractitioner,Ithinkthelackofalignmentcurrentlyamongthestandardsettingorganizations…isasignificantimpedimentcurrentlytoactionandtoscaledfinance.AndIhearthisconsistentlyfrommyformercolleaguesincorporations.SoI'mfeelingahighdegreeofurgencyinaligningasquicklyaspossibleonarobustsetofguidance.”RtHonChrisSkidmoreMP(MemberofParliamentoftheUnitedKingdom)“Thespacecurrentlyforoffsettingstandardsisfragmented.Andthat'stothedetrimentoftheemergingcarbonmarket.Weknowthattherearevariousstandards,andthelongevityofthesearesetbyorganizationsinternationally.Butthismakesitdifficultforbusinesseslookingtoinvest,toknowexactlyhowtooffsetandwheretoplacetheirinvestments,aswellasalsolookingatwheretoplacethoseinvestmentsinemissionsreductionsandremovals.”2110TrendsCarbonMarketExpertsareTalkingAboutRightNowSoasmoreguidanceandstandardsbecomeavailable,botharoundcarboncreditqualityandtheirroleincorporatedecarbonizationstrategies,organizationsliketheVoluntaryCarbonMarketsInitiative(VCMI),theIntegrityCouncilforVoluntaryCarbonMarkets(ICVCM),andtheScience-BasedTargetsInitiative(SBTi)areworkingcloselytoensureconsistencyandalignment.TheICVCMreleasedtheirCoreCarbonPrinciplesinMarchof2023;theVCMIwillissueaClaimsCodeofPracticeinJune,andtheSBTi’sCorporateNet-ZeroStandardwillbecomplementedbyfurtherguidanceonBVCM.Theorganizationsareworkingcollaborativelytoensurethateachoffersguidancethatiscomplementaryanddoesnotcreateadditionalconfusioninanalreadycomplexmarket.ScarlettBensonBeyondValueChainMitigationLead,ScienceBasedTargetsInitiative(SBTi)“Ithink[theSBTiandotherbodiesare]verymuchalignedinthatgrandvisionofwhattheroleofthecarbonmarketcanbeastheircomplementarytool.There'salotoftechnicalwork,butalsoalotofcommunicatingwith[thedifferentbodies]abouthowtostrategicallypresentourinitiativestotheoutsideworld.”MarkKenberExecutiveDirector,VCMI“We'realreadylookingattheindividualorganizationalleveltomakesurewe'rejoinedup.We'reawarethatourcollectiveaswellasindividualsuccessdependsonwhatweproducebeingintelligibleandusablebyouraudience,whichisprincipallycorporatesaroundtheworld.Wearealreadyworkingcloselywithallthoseorganizationsandotherstomakesurewearealignedandjoinedup.Andthat'snotjustinthetechnicalrequirementsinourstandards,frameworks,andguidance,butalsointhewaywecommunicate.”Continued8.Standard-settersareworkingonbetter,moreconsistentcorporateguidance.9.Thevoluntarymarketislayingthefoundationsformandatoryregulation.Todate,thevoluntarycarbonmarkethasremainedseparatefromcompliancemarketsliketheEU’sEmissionsTradingSystemorCalifornia’sCapandTradeProgram.Butasmorejurisdictionsaroundtheworldtightenenvironmentalregulationsandlookseriouslyatpricingcarbon,thevoluntarymarketmaybecomeincreasinglyentwinedincomplianceefforts.2210TrendsCarbonMarketExpertsareTalkingAboutRightNowScarlettBensonBeyondValueChainMitigationLead,ScienceBasedTargetsInitiative(SBTi)“Ithinkit'sveryclearthatthesevoluntaryinitiativescanneverbeareplacementforpolicyinsupportofclimatechange.Therealityisthatwe'reactuallydealingwithapolicyfailurehere,inthatthereisn'talreadyapolicyinplacethat'srequiringcompaniesto[decarbonizeandmitigate].”MarkKenberExecutiveDirector,VCMI“Thefactthatwe'retalkingaboutvoluntaryclimateactionin2023isaclearsignofpolicyfailure.We'vebeentalkingaboutthislongenough,andweshouldhaveeconomy-widepolicieseverywhere.Thereasonthisvoluntaryactionexistsisbecausethere'sappetiteforit,andthere'sneedforit.”ManyparticipantsintheVCMarevocalabouttheurgentneedforpoliciesthatmandatedecarbonizationandmitigationthroughcarboncredits.Improvementsintransparencyandintegritywithinthecorporate-drivenvoluntarymarket—whichoftentendstomovefasterthangovernment-regulatedprograms—maylaythefoundationsforpolicymakerstoreplicate.Additionally,thecorporatedemandsignaledbyVCMgrowthshouldgivepolicymakersconfidencethatmandatorycarbonregulationmight,infact,bewellreceived.ScarlettBensonBeyondValueChainMitigationLead,ScienceBasedTargetsInitiative(SBTi)“Ithinkwhatwecandoasstandard-settersisshowpolicymakersthatcompaniesarewillingtodothisvoluntarily.TheSBTihasmorethan5000companiesacrosstheworld[voluntarily]committed,sowecanseethatcompaniesandbusinesseswanttogofasterthanregulation.Theyseeclimatechangeasarealrisktotheirbusinesses,andwanttotakethisaction.“Onewouldhopethatthisemboldenspolicymakerstomovefaster.AndthenIalsothinkthatthestandardsthatwesetcangivethemabitofaleapfrogintermsofpolicydesign.Wecanshowthemwhat'sworkedandwhathasn't,andgivethemaroadmapforhowtheycouldimplementandprogressiveclimatepolicy.”SamuelGillCo-founder&President,Sylvera2310TrendsCarbonMarketExpertsareTalkingAboutRightNow“Governmentneedstoplaymoreofarolehere.Idon’tthinkit’srealistictoasktheprivatesectortocompletelyself-regulateoneitheritsdecarbonizationjourneyand/orwhatitshouldbedoinginthecarbonmarkets.Realbehaviorshiftswillrequiresomesortofcarbonpricingtobebakedinandpushedintolaw.Directorshavealegalrequirementtomaximizethebenefitstotheirshareholdersfromaneconomicperspective–youcan’tpushacompanyintotheredinthenameofnetzero.Sotheprivatesectorwillneedtoberegulatedmuchmoreheavilytodriveincentives.”AboutSamuelGillistheco-founderandpresidentco-founderofSylvera,afirmprovidingtrustedcarbondataforgenuineclimateimpact.In2020Samco-foundedSylveraalongwithAllisterFureytohelpbusinessesandgovernmentsconfidentlyinvest,deliver,orreporttheirrealclimateimpact.Priortoco-foundingSylvera,Samwasacorporatelawyer.Mostrecently,heworkedatBakerMcKenziefocusingonEnvironmental,SocialandGovernance(ESG)products,wherehegainedexposuretothecarbonmarkets’issuesandopportunities.HebeganhislegalcareerasaninvestmentfundsAssociateatAkinGumpStraussHauer&Feld.SamholdsaBachelor’sofLawfromCardiffUniversity.2410TrendsCarbonMarketExpertsareTalkingAboutRightNowToday,whatiscurrentlyvoluntaryinmanyjurisdictionsmaybemandatorybytheendofthedecade,whichcouldsignificantlyimpactvoluntarymarkets.Forexample,Article6oftheParisAgreementmayleadtobetterqualitycontrolfromvoluntaryregistriesandseecertainvoluntarycarboncreditsdesignatedas‘adjustedcredits’(ensuringthesearen’tdouble-countedtowardshostcountryorpurchasingcountryNationallyDeterminedContributions).SamuelGillCo-founder&President,Sylvera“Ithinkthat,onanongoingbasis,Article6.4willlikelybethemechanismthatfacilitatesthatinteractionbetweencompliancemarketsandvoluntarycarbonmarkets,dependingonwhetheracorrespondingadjustmentisrequired.Whetherornotthatimpactspricing[isanotherquestion].Wherecorrespondingadjustmentsareberequiredforprivatesectorentities,thiswillrequireahigherpricebeingset,becausealmostindefinitelythehostcountrywillaskforacontributionfromtheissuingentity.Thehighest-taxedoffsetswilllikelybe6.2-and6.4-correspondingly-adjustedcarboncredits,inahostcountrywherethereisaspecifictaxationregime.Buttherewillbevariation.Continued9.Thevoluntarymarketislayingthefoundationsformandatoryregulation.MarkKenberExecutiveDirector,VCMI“[TheVCMI]don'texpectcorporateclimateclaimsaroundtheuseofcarboncreditsanddecarbonizationtobevoluntaryforever.Andwecertainlyhopethatbytheendofthisdecadeatthelatest,alotwillhavebeenincorporatedintoregulation.We'realreadytalkingtoadvertisingregulatorsandconsumerprotectionbodiessothatwherecompaniesareusingclimateclaimsorcompetingintheiradvertising,thatbecomesregulated.”10.Thevoluntarycarbonmarketisstillgrowing.Despitechallengeswithlegacycredits,limitedhigh-qualitysupply,andcontinuingworkonofficialguidance,thecorporatedemandforcarboncreditsisstrong—andthat’sunlikelytochange.Moreandmorecorporatebuyersaretakingamorenuanced,impact-drivenapproachtocarboncreditinvestments,becominginvolvedearlierinprojectsandfocusingoncontributionover‘offsetting.’Voluntarycreditretirementsheldstrongin2022andareontracktobeatrecordsin2023.Andalthoughfurthermarketadjustmentsanddevelopmentswillundoubtedlyleadtosmaller-scalehighsandlowsinfutureyears,theoveralltrajectoryfortheVCMlookspositive.2510TrendsCarbonMarketExpertsareTalkingAboutRightNowJustinCochraneDirector&CEO,CarbonStreamingCorporation“It'snotgoingtobeaflatcurveupwards.We'regoingtoseesomevolatility.I'mveryexcitedaboutwherethismarketis[headed]overthenext5,10,20,30years.”RtHonChrisSkidmoreMP(MemberofParliamentoftheUnitedKingdom)“WhenIwroteTheMissionZeroreport,IwasverymuchdeterminedtoensurethatwesawNetZeronotasacostoraburdenonbusiness,butasthatgrowthopportunity—thatopportunitytorecognizenewefficiencies,newproductivities,newwaysofcreatingsupplychainsofinnovationforthefuture.SoNetZeroisnotsimplyanenvironmentaltoolbywhichweneedtodecarbonizeandreduceouremissions.Itisaneconomicinstrumentforthefuture.”DiscreteRetiredCreditsByEventDateSplitByProjectType(tCO2e)2018CarbonEngineeringNon-C02GasesFuelSwitchEnergyEfficiencyRenewableEnergyREDD+NatureRestoration53M76M104M180M184M63M20192020202120222023150M100M50M0MSource:TroveIntelligenceConclusionIthasbeenabusyyearforcarbonmarketssofar,fullofdevelopmentsandongoingdialogueabouttheroleofcarboncreditsinglobaldecarbonization.Butthesechangesspeaktotheundeniablegrowthandpositivemomentumthatistakingplaceinthemarket.Newtechnologyandinnovationwillallowforbetterverificationoflegacyprojectsandproduceanewgenerationoftech-enabledprojectswithbuilt-inqualityassurance.Regulatorybodiesandstandard-settersareworkingcloselytobuildframeworksandguidanceforahigh-integrityvoluntarycarbonmarket.Andcorporatebuyersareshowingboldleadership,optimizingforquality,andlookingtogetinvolvedwithprojectsatthegrassrootslevel.Weurgehesitantbuyerstofollowtheexampleoftheleadingcorporateclimatebrandsandinvestinhigh-qualitycarbonprojectsassoonaspossibleandatameaningfulscale.Think‘last,notlater.’Carbonprojectsneedyourcontributionstosavemanyoftheworld’scriticalforestecosystemsandreversethetrajectoryofunmitigatedGHGemissions.2610TrendsCarbonMarketExpertsareTalkingAboutRightNowSamuelGill,Co-FounderandPresidentatSylvera,andChrisBennett,GlobalHeadofESGStrategyatS&PGlobal,discussthestateofthecarbonmarketsattheCarbonMarketsSummitin-personeventinLondon.2710TrendsCarbonMarketExpertsareTalkingAboutRightNowToinvestinhigh-qualityforestcarbonprojectsenabledbytechContactusForinsightsoncarboncreditqualityratingsandanalyticsContactusWhotruststheplatform?SylveraContactustolearnmore.Ourcustomersandpartnersspancorporatebuyers,tradersandexchanges.Theyareoftenlargeinstitutionswhohavemadenetzerocommitments,andwhoarethebiggestbuyersofcarboncreditsinthemarket.Sylvera’smissionistobeasourceoftruthforcarbonmarkets.Visitandfollowus10TrendsCarbonMarketExpertsareTalkingAboutRightNow