How the VCM is evolving until 2023 by IETA

The purpose of The Evolving Voluntary Carbon Market Paper is to shed light on how the VCM is evolving. A group of IETA members have identified the issues and uncertainties that market players are experiencing due to the debate around the VCM and the ambitious role it can play. The Paper discusses a range of topics significantly impacting the market by dividing them into the following four sections:

• Section A: Corporate Net-zero Guidance and Inclusion of Offsetting

• Section B: The Relationship Between the VCM and Country Actions Under the Paris Agreement

• Section C: Consolidation or Proliferation of Crediting Approaches

• Section D: Governance and Increasing Regulation

Corporate Net-zero Guidance and Inclusion of Offsetting

• ITMOs becoming accepted in compliance
• CORSIA compliance
• First ITMO Transactions annunced in 2022
• Article 6.4 mechanism to be operational in 2024

The Relationship Between the VCM and Country Actions Under the Paris Agreement

• The VCM and Article 6 remain independent markets with separate governance structures; however, we anticipate increased convergence over time
• ‘Double claiming’ by countries and companies is not in itself problematic as it reflects nested inventories. At the NDC level the emissions reductions have only been counted once
• Corresponding adjustments are not required when credits are bought on a voluntary basis and the emission reductions contribute to the host country’s NDC
• Increased fungibility of carbon credits across compliance and voluntary markets will reduce complexity and increase investor interest

Consolidation or Proliferation of Crediting Approaches

Governance and Increasing Regulation

Oportunities for project managers:

• Strategy Lab participation in IETA