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The Future of the Voluntary Market

COP 22 Marrakech, 11th November 2016

Simon Henry

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Voluntary action has a role to play in supporting the Paris agreement

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We need to find ways to support this activity

• ICROA congratulates the entry into force of the Paris Agreement, and we look forward as a business association, to playing our part

• The voluntary market has demonstrated private sector willingness to take action to reduce emissions beyond compliance. It is driven by the ability of corporates to differentiate and take a leadership position

• The Paris Agreement – in particular Article 6 – presents an exciting opportunity for increasing voluntary action

What is ICROA?

“The International Carbon Reduction and Offset Alliance (ICROA) is an

international industry association housed within IETA”

• ICROA’s primary aim is to deliver quality assurance in

carbon management and offsetting, through

adherence to the ICROA Code of Best Practice

• ICROA provides a unified voice for the voluntary

carbon market

• ICROA ensures credibility and quality for corporates

using voluntary carbon offsets to reduce their

greenhouse gas emissions

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Our members are leading global service providers….

….operating around the world

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….working with leading companies

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Since market inception, nearly a billion tonnes of credits have been traded, with a value of $4.6 billion

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Source: Ecosystem Marketplace, 2016

The Paris Agreement presents opportunities for increased voluntary action, but also raises questions

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Kyoto Protocol

• 37 countries with top down targets

• CDM and JI mechanisms to generate carbon offsets via the UNFCCC

• Voluntary market offsets generated in non Annex I countries

Paris Agreement

• 192 countries with bottom up pledges

• New market mechanisms will be established under Article 6

• Greater ambition will be needed to deliver objectives of the Agreement

1. How can the voluntary market help deliver the Paris Agreement objectives?

2. What opportunities will there be for voluntary offsetting, if every country has an emission reduction target?

3. How can Article 6 provide the right framework to enable the voluntary market?

Key

questions

1. The voluntary market can help deliver the Paris Agreement by…

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• Going beyond compliance: Providing the infrastructure and incentives for the private sector to reduce and offset emissions beyond compliance

• Guaranteeing robustness of emission reductions: Whilst the voluntary market is small, it is robust and has delivered integrity and innovation

• This is recognised by UNFCCC initiatives such as Climate Neutral Now and NAZCA, and the use of VERs in South Africa’s carbon tax

• Building momentum: Over last 15 years the voluntary carbon market has been successful in attracting private sector capital to finance mitigation and SD outcomes

• Raising ambition: With the right mechanisms and incentives in place, voluntary action can help raise ambition

2. Article 6 will establish mechanisms to facilitate offsetting between countries with emissions targets

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6.1 & 2: Cooperative Approaches

• Cooperative approaches through “internationally

transferred mitigation outcomes” to allow for

higher ambition and sustainable development

6.2 & 5: Robust Accounting

• Rules for carbon market accounting, particularly

avoidance of double-counting

6.4: Emissions Mitigation Mechanism

• Establishment of a mechanism to mitigate emissions and support sustainable development

6.8: Non-market approaches

• Non-market approaches to….. enhance public and private sector participation in the

implementation of NDCs

3. Article 6 can provide the framework to enable voluntary action by, for example…

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Buying offset creditsFinancing emission

reductions

Voluntary action

• The host country government allows the export of the carbon credits to a non-state actor

• The buyer can use the credits to support a strong environmental claim, such as carbon neutrality

• The emission reductions do not contribute towards the delivery of targets in NDCs

• But, the project delivers valuable sustainable development outcomes in addition abatement

• A non-state actor finances emission reductions which remain in the host country

• These would contribute towards the delivery of targets in the host country’s NDC

• The non-state actor can make a environmental claim related to the financing, but not carbon offsetting

• This action could be encouraged through incentives from the host country Government

In conclusion

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The Paris agreement is an exciting opportunity for ICROA and its customers

We want to play a constructive role to grow the private sector momentum that has been created over the past 15 years

We would like to see voluntary action supported through the NDCs and the UNFCCC

And finally, we believe carbon offsetting is a tried and tested tool for use by the private sector, and should be supported

www.icroa.org

Simon HenryProgramme DirectorInternational Carbon Reduction

and Offset Alliance (ICROA)

IETA SecretariatTel: +41 (0) 2273 70507Mail: henry@ieta.org

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