Voluntary Carbon Research Articles

Developing regional voluntary carbon markets for peatlands: innovation processes and influencing factors

ABSTRACT Integrating peatland restoration measures with climate policy is critical for meeting climate targets, but the current policies often fall short of utilizing the large potential that exists. Despite growing private sector interest, few regional voluntary carbon markets for peatlands have emerged worldwide. In this study, we explore three pioneering examples from Europe. From the perspective of social innovation, we aim to provide clarity on how these innovations emerged and developed, which actors drove the innovation process by assuming which roles, and which factors fostered or hindered the development. We do so by mapping the innovation process using Process Net-Map. The results show that all three cases have followed remarkably similar patterns in their innovation processes. Four phases, i.e. preparation, definition, refinement, and up-scaling were identified, as were actors’ roles as innovators, promoters, intermediaries, implementers, and knowledge providers. However, the case studies are very different with regard to which actor constellation drove the innovation process: MoorFutures is driven by public and scientific actors, Valuta vor Veen is promoted by civil society actors in consultation with practitioners, and Hiilipörssi shifted from civil society to private actors. The governance modes, that is, actor constellation and their goals, have led to differences in concept, robustness of methodology, mitigation measure, and possibly potential for up-scaling. Our study indicates that the timing of interventions when actors with certain roles stepped in can accelerate the innovation process. Important political, economic, technical, and social factors influencing the innovation process, especially knowledge and trust accumulated between some key actors, are outlined. Key policy insights Private funding for regional voluntary carbon markets (VCMs) can tap the climate mitigation potential from peatlands, which is not currently adequately addressed by governments. Actor constellation drove the innovation process, leading to different concepts, methodologies, and mitigation measures. The timing of interventions by actors, notably providing seed funding, network, expertise and visibility, was critical for success. Building trust for regional VCMs requires not only a robust methodology to calculate emission reductions but also partnership and endorsement. The future development of climate policy on peatlands could be a decisive factor in regional VCMs.

Research on Voluntary Carbon Information Disclosure Mechanism of Enterprises from the Perspective of Stakeholders—A Case Study on the Automobile Manufacturing Industry

As the primary source of carbon emissions, enterprises must work hard to save energy, reduce emissions, and disclose timely carbon information to the public. As a key means of communicating carbon management performance to stakeholders, carbon information disclosure is directly tied to the future sustainability of enterprises. Based on panel data of 118 listed firms in the automotive manufacturing industry from 2017 to 2021, this study rates the sample companies' quality of carbon information disclosure. The impact of the government, creditors, media, employees, and suppliers on such disclosure is also examined from the stakeholders' standpoint. The findings reveal that: (1) Although there has been a gradual increase in the degree of disclosure, overall levels are still low, and the willingness to voluntarily disclose is insufficient. (2) When other variables are neglected, the government, creditors, media, and employees all assist enterprises in disclosing carbon information, but the influence of suppliers will inhibit such disclosure. In the context of a complex economic system, the level of carbon disclosure is positively correlated with the government, the media, and employees, while negatively correlated with creditors. The influence of suppliers is not significant. These findings may aid in formulating related policies from different dimensions, directing enterprises to publish carbon information actively and strengthening carbon management.

The Evolution of Canada's Carbon Markets and Their Role in Energy Transition

The tapestry of compliance and voluntary market mechanisms for carbon and other environmental attributes in Canada’s infrastructure capital markets reflects the almost 30-year history of carbon policy development in Canada and around the globe. This history of provincial and federal policy and regulatory changes has left some scars and stranded investments. As a result, energy market professionals and emission offset project developers have had to be resilient in their efforts to scale, integrate, and maximize opportunities for carbon credit products. Recently, we have witnessed increased efforts toward climate-focused investment criteria and technology-bolstered acceleration toward net-zero targets. Carbon credits are one of the key tools that will allow conventional businesses to continue operating as the economy decarbonizes, and they can also facilitate investment in new technologies and practices that will be critical to achieving material economy-wide emissions reductions. Both domestically and internationally, however, there are key barriers that are limiting carbon markets and that highlight the need for more carbon finance investment and policy certainty, as well as standardization and credibility in both compliance and voluntary environmental product markets. Following the Supreme Court of Canada’s ruling in March 2021 to uphold the constitutionality of the federal government’s Greenhouse Gas Pollution Pricing Act , market expectations were high (and perhaps still are) that the regulatory landscape supporting carbon finance in Canada would finally come into better focus. This article will explore the current snapshot of compliance and voluntary carbon finance tools available in Canada, and will highlight some of the challenges and opportunities in navigating the interplay between these products.

Quality offsets? A commentary on the voluntary carbon markets

ABSTRACT From Big Tech to Oil Majors, companies are increasingly resorting to the voluntary purchase of carbon credits to offset their greenhouse gas emissions and make claims about their carbon neutrality. Yet, the credibility of offsetting as a solution to climate change remains contested. From the outset, that is, since the mid-2000s, the voluntary carbon markets have been criticised, as we discuss in this commentary, which stems from our long-standing interest in the social study of carbon markets. Drawing on interviews conducted with offset suppliers and buyers, we examine some of the ways in which the issue of quality (or the lack of) has come to be a central concern in the voluntary offsetting markets.

Voluntary carbon market derivatives: Growth, innovation & usage

Voluntary carbon markets (VCMs) have emerged as a preferred market mechanism to support the global economy's transition to a low carbon future. Trading in carbon offset derivatives has moved into the financial mainstream with commodity exchanges now offering trading in VCM futures. This paper discusses the historical background of carbon trading, the market ecosystem of companies and organizations that provide the necessary infrastructure, and the evolution of VCM derivatives, focusing on CME Group listed instruments. The paper discusses findings that show that exchange-traded derivatives products can lead to increased standardization, transparency, and price discovery in nascent VCMs. We review academic literature published in this growing field of research and conclude by providing recommendations for areas of further market development and research.

Voluntary carbon neutral programs. Adoption and firms’ strategies

Voluntary Carbon Neutral (CN) programs promote the reduction of Greenhouse Gas emissions of participants. The main objective of this article is to review the literature about firms' behavior in connection to CN programs, paying particular attention to the adoption decision and the firms' strategies to meet the CN requirements. As an additional aim, we analyze the economic rationale behind the firms' decisions by connecting our literature review to a simple model based on the standard microeconomic theory of the firm. We model the firm's decision as a three-stage problem which includes, first, the adoption (or not) of a voluntary CN program, second, the selection of strategies to become CN (if the program is adopted) and third, the usual price and quantity decisions in the output market. The model helps understand some results found in the literature, such as why some activity sectors are more prone than others to adopt the CN certification. It also provides an explanation for the fact that these voluntary programs tend to be adopted by firms that are large, innovative, and more concerned about intergenerational equity and environmental preservation.

Board Gender Diversity and Voluntary Carbon Emission Disclosure

In this study, we investigate the effect of board gender diversity on the decision to disclose carbon emissions voluntarily. Using an international sample consisting of 22,841 firm-year observations from 38 countries for the period 2010–2019, we determine the existence of a positive relationship between the percentage of female directors on the board and carbon disclosure. This evidence supports agency and resource dependency theories, as a gender diverse board indicates strong governance and better communication among stakeholders. Additionally, we examine the moderating effect of gender quotas across sample countries, where either soft or hard quotas have been implemented. We show that the number of firms disclosing their carbon emissions is, on average, higher in countries with either hard or soft quotas than in countries with no quota. Moreover, the positive effect of board gender diversity on voluntary carbon emission disclosure is similar across firms in countries with quotas and without quotas. The reported results demonstrate that there seems to be no need for country-level strict regulations regarding the firm-level percentage of female representation on the board to be effective, as gender board diversity in countries with no quotas has a similar effect in explaining voluntary carbon disclosure as in countries with quotas and those changing to quota regulation.

The effect of climate disclosure on stock market performance: Evidence from Norway

AbstractIncreased concerns about climate change and its economic impact emphasize the necessity of sustainable investment and have become a demanded research topic. Via voluntary carbon and climate‐related disclosure, companies indicate their exposure to climate change risks and how they counteract them. Investors seeking to reduce the climate risk of their portfolios can utilize this information. Using the 2010–2020 Carbon Disclosure Project scoring for companies in Norway, I formed portfolios of stocks with high, low, and no scores. These portfolios represent lower, higher, and unknown climate risks, respectively. The results suggest that a value‐weighted portfolio of firms with high scores generates an extra 1.3% annualized return over the market. This portfolio steadily outperformed the market in recent years based on the information and Sortino ratios. However, after controlling for recognized risk factors, the high‐score portfolio has no abnormal return unless energy stocks are excluded. In contrast, low‐ and no‐score portfolios were penalized for bearing higher climate risk so that there is a significant climate alpha after 2016. This research highlights that a climate‐aligned investment strategy is profitable while offering lower climate change risk exposure.

REDD+ But Not Ready

The ratification of Article 6 of the Paris Agreement allows countries to engage in compliance-based carbon markets which will allow countries to offset their own carbon emissions by investing in emissions reductions elsewhere. Given this recent development, it bears considering whether the international system is prepared to adopt existing voluntary carbon markets into a compliance system. Accordingly, this paper examines the nationally determined contributions (NDCs) of major REDD+ host countries to determine whether they are prepared to adopt this program under the compliance-based system. Given the well-documented risks of carbon offset markets to indirectly increase emission (via non-additionality, leakage, or incentivizing weak governance from host states), this paper argues that host states need to set clear guidelines towards the roles internal decarbonization policy and what is additional contributions from carbon markets. This paper ultimately argues that REDD+ is ill-equipped to function under a carbon market as host states appear reliant on REDD+ to achieve their own internal climate goals and suggests that better accountability is needed for REDD+ to be adopted under article 6.

REDD+: The Opportunity for Sustainable Management in Zagros Forests

ABSTRACT The Reducing Emissions from Deforestation and Degradation (REDD+) projects aim to prevent deforestation and greenhouse gas emissions as a policy to combat climate changes. This article evaluates changes to the Zagros’ Forest cover in 20 years and predicts the implications of implementing the REDD+ project in the next two decades. Using Landsat Forest cover maps and a logistic regression model the potential for forest cover transfer to non-forest regions was modeled to identify regions at risk of deforestation. A Markov chain was implemented to predict the changes. Receiver Operating Characteristics (ROC) was employed for validation, and the Voluntary Carbon Standard (VCS) was utilized to model the REDD+ project baseline to predict the forest cover changes. The findings indicate, 37,809 hectares of forest cover were lost in the past 20 years and with this trend, the amount of greenhouse gas emissions will increase. However, implementing the REDD+ project can prevent the release of 1,714,534.13 tCO2e. Therefore, this deteriorating forest possesses the potential to reduce CO2 emissions by preventing deforestation, identifying deforestation-prone areas and implementing the REDD+ project utilizing the methodology presented. Climate change mitigation, carbon sequestration, and biodiversity protection are just a few of the benefits of REDD+ projects that can aid sustainable forest management

Young consumers' attitudes towards voluntary carbon offsetting

AbstractVoluntary carbon offsetting (VCO) programmes are an initiative to reduce global carbon emissions and are increasing in popularity among companies, despite controversies and debates regarding the effect of offsetting activities on carbon emissions. VCO has become an important aspect of the sustainability and marketing strategies of companies. Few studies have researched the consumer aspect of companies using carbon offsetting in marketing. This study explores the knowledge, attitudes and behavioural intentions of young Danish consumers towards carbon offsetting. Qualitative interviews with 25 young Danish consumers were conducted based on the theory of planned behaviour, which was used as a conceptual framework. The results of the study indicate that the young consumers have little knowledge of VCO and perceive the topic as complicated and difficult. This contributes to distrust and negative perceptions of carbon offsetting programmes. In conclusion, guidance for companies to communicate carbon offsetting programmes is provided.

Blocked chains of governance: Using blockchain technology for carbon offset markets?

Information and communication technology (ICT) plays a critical role in environmental governance; however, research into power in governance has not focused on the impact of ICT. In this study, we analyze the use of blockchain in a voluntary carbon offset market using the “Four Faces of Power” (compulsory, institutional, structural, and productive) conceptual framework to determine how ICT can change the power dynamics within a network of stakeholders. Proponents have proposed that blockchain technology can solve several issues that carbon marketplaces and offsets face, such as cybersecurity, traceability, and financial liquidity. Despite these proposals, there is little scholarship on existing cases using blockchain in carbon offsets. We found that the use of blockchain technology by the company Veridium changed the compulsory and institutional power dynamics within the network of stakeholders it was a member of. Veridium’s choice to use blockchain technology was likely the result of structural and productive power dynamics surrounding the technology at the time. The power dynamics changed because the use of blockchain for Veridium’s carbon offset market caused additional stakeholders to join the network of stakeholders. The new stakeholders held greater compulsory and institutional power than Veridium. This research contributes to the limited scholarship focused on ICT and power in environmental governance. Empirically it contributes to the ongoing discussion around the possibilities of blockchain technology for climate policy.

Carbon Neutrality Strategies for Chinese International Oil Company Based on the Rapid Development of Global Carbon Market

A comprehensive solution for the Chinese international oil company to achieve carbon neutrality, through participation in the global carbon market, is developed. In this work, the overall landscape and operation mechanism of global carbon market is clearly and systematically illustrated by comparing the characteristics of the cap-and-trade system and the carbon tax. The feasibility of developing a global liquidity carbon market is pointed out by finding the connections among compulsory and voluntary carbon markets around the world. Based on the profound understanding of global carbon market, three levels of carbon trading strategies are proposed to help Chinese oil companies reduce emission cost: (1) Develop low carbon projects and trade in one jurisdiction; (2) develop low carbon projects and trade in different jurisdictions; and (3) trade carbon credits or allowance with physical commodities. Three decision-making methods are provided, respectively, for the above three levels of carbon trading strategies by introducing a shadow pricing model for carbon emission rights.

Voluntary Carbon Disclosure (VCD) Strategy under the Korean ETS: With the Interaction among Carbon Performance, Foreign Sales Ratio and Media Visibility.

While there has been a sufficient amount of research and empirical evidence on the factors that influence a company’s decisions to voluntarily disclose carbon information, little research has been done on the carbon disclosure practices of ETS-affected companies, in Asian countries, in particular. Considering this, it is essential to shed light on more diverse linkages between carbon performance and voluntary carbon disclosure (VCD) under ETSs taking into account the specific context of each individual country. Drawing on the Korean ETS-affected companies with a contents analysis of their sustainable reports from 2015 to 2019, the present research seeks to address the existing knowledge gaps in the current literature on carbon disclosure. In doing so, hierarchical ordinary least square (OLS) regression analysis is used to infer causality and assess the findings. The findings empirically prove a positive relationship between carbon performance and VCD, which means that the affected companies under the Korean ETS are likely to disclose more when they have favorable carbon reduction performance. Furthermore, this link tends to be amplified for companies with a high percentage of foreign sales, while the role of media visibility interacts differently with carbon performance in influencing VCD.

Analysis Voluntary Carbon Pricing Programs for their Further Adoption by Ukrainian Enterprises

The wide spreading of the voluntary carbon pricing practice will lead to the efficiency of governmental policies towards low-carbon an economy, since they will be able to adopt clearly anticipated price policies in Ukraine and other countries. But adopting the internal carbon pricing programs by domestic enterprises is challenging due to expose to political, energy, financial and other crises in Ukraine and should be carefully studies in prior. Thus we offer considering best experiences of European companies that have already effectively and efficiently incorporated carbon pricing schemes into their management processes and strategic decisions. For this purpose, the theoretical issues of implementing voluntary carbon pricing programs by domestic enterprises have been investigated. Theoretical and practical base of the article consists of general economic and environmental economic principles, works of international and national scientists in the field of carbon pricing. This study provides analysis of the effective tools of mitigating risk associated with climate change policy and regulations, which can be applied by domestic firms in Ukraine. Using internal carbon pricing programs as a risk management tools, we described potential benefits, costs and limitations of the program. We also introduced the business study case how to apply the internal carbon pricing tool, in particular, shadow price by a company. This example proposes a methodological approach to implementing a shadow price tool. Thus, can be applied by domestic company in order to identify the feasibility of low-carbon emission investment and make right investment decision towards decarbonisation. Further analysis reveals that internal carbon pricing programs can be implemented by domestic firms as an efficient strategy and enable a greenhouse gas emissions reduction in compliance with the future or current national target. Our study provides practical recomendations through which Ukrainian companies can address climate risk and provide guidance to governments and regulators for the forming and further implementation of national environmental policies.

Valor económico del almacén de carbono en biomasa aérea de manglares de Sonora, México

Introduction: Mangroves provide environmental goods and services that mitigate climate change. Objective: To estimate the economic value of the carbon stock in the aboveground biomass of mangroves in Bahía del Tóbari (BT) and El Sargento in Sonora. Materials and methods: Field research were conducted in 2014 and 2015 in 16 plots (10 x 10 m). Biomass of Laguncularia racemosa (L.) Gaertn, Rhizophora mangle L. and Avicennia germinans(L.) L. was determined with specific allometric equations. Carbon stocks and avoided CO2e emissions were estimated with conversion factors 0.5 and 3.7, respectively; these data represented the 2015 baseline. The 2020 estimates included changes in mangrove cover. The economic value was determined using the marginal carbon abatement cost method. Results and discussion: The 2015 baseline indicated reserves of 52.1 MgC∙ha-1 and 191.2 tCO2e∙ha-1 for BT, and 71.7 MgC∙ha-1 and 263.2 tCO2e∙ha-1 for El Sargento. By 2020 avoided emissions of 69 368.2 tCO2e∙TA-1 (TA= 362.79 ha) were estimated for BT and 116 696tCO2e∙TA-1(TA = 468.32 ha) for El Sargento. Economic values of these emissions were 131 799.5 USD (World Bank) and 180 357.2 USD (voluntary carbon market) for BT and 221 722.2 USD (World Bank) and 303 409.4 USD (voluntary carbon market) for El Sargento. Conclusions: The highest estimates of C reserves and economic value were recorded at El Sargento. Compared to other studies in the region, both sites had higher avoided CO2e emissions.

Forest protection and permanence of reduced emissions

Tropical forests are essential for climate change mitigation. With growing interest over the use of credits from reducing emissions from deforestation and forest degradation (REDD+) and other natural climate solutions within both voluntary and compliance carbon markets, key concerns about the long-term durability of the reductions, or their permanence, arise for countries, corporations, regulators, and policy makers. This paper seeks to analyze the longevity of emissions reductions from different policies to slow down and stop deforestation. To establish conditions of permanence, we conduct numerical analyses using a model based on a cellular automata algorithm that learns from historical deforestation patterns and other spatial features in the Brazilian state of Mato Grosso. First, we simulate increased law enforcement to curb deforestation at a jurisdictional scale from 2025 to 2034, followed by potential policy rollbacks from 2035 to 2050. Second, we consider alternative scenarios to avoid potentially legal deforestation coupled with reforestation. We find spatial and path dependence – a successful policy intervention may permanently change the deforestation trajectory even after potential policy reversals. Hence, permanence depends both on the probability of policy reversals and the risk of emissions overshooting. Our results are important for advancing the understanding around the unsettled debate on the permanence of avoided emissions. Further, this paper argues that as policies to prevent deforestation or reduce emissions otherwise are reversible, permanence should be understood and discussed in a probabilistic and time-dependent framework.

Cultural influences on the quality of corporate social responsibility disclosures: an examination of carbon disclosure

PurposeAs more companies choose to disclose corporate social responsibility (CSR) information, it is important to gain an understanding of the quality of disclosures and factors that influence quality. The purpose of this study is to examine the role of culture as a determinant of the quality of voluntary carbon emission disclosures.Design/methodology/approachThis study uses regression analysis to test the influence of culture on the quality of carbon disclosures. The sample of this study comes from companies who voluntarily report to the carbon disclosure project. The authors operationalize the quality of disclosure using the Carbon Disclosure Leadership Index. The authors operationalize cultural values using both Hofstede’s metrics (Hofstede, 1980) and Project GLOBE (House et al., 2004).FindingsThis study predicts and finds a negative relationship between quality of disclosure and high individualism scores. This study also finds that the quality of disclosure is lower for companies located in countries with high power distance scores. The authors find that the quality of disclosure is higher for companies located in countries with gender/assertiveness scores that indicate a higher value on the environment than on the importance of economic growth. While quality is marginally related to uncertainty avoidance using Hofstede's measure, quality is not related to uncertainty avoidance using the Project GLOBE metric. The authors did not find a hypothesized negative significant relationship between quality and long-term orientation.Practical implicationsQuality is a measure of importance to users and regulators of disclosures.Social implicationsNational culture is an important determinant of CSR disclosure quality.Originality/valueThis study extends the previous research by using a metric for quality based on an independent evaluation of disclosures and by the role of culture in a multi-country study.

Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation

Using a hypothetic southern pine plantation in the state of Georgia of the United States, a benefit-cost analysis of forest carbon is conducted for landowners in the voluntary carbon market. With carbon values being defined by the marginal forest growth, it is found that the inclusion of carbon into the objective function usually leads to longer rotations and higher total profits. In our baseline analysis, the rotation age increases by four years when both timber and carbon are considered. Thus, landowners can benefit from voluntary carbon trading and additional carbon can be fixed in the forests. Landowners’ decision on forest carbon is most sensitive to the discount rate and timber and carbon prices. When the discount rate is higher, future cash flows become less valuable and the optimal rotation shortens. When timber prices exceed carbon price by a large margin, timber value dominates carbon value and the optimal carbon rotation approaches the Faustmann rotation. Therefore, with a higher discount rate and higher timber prices, voluntary carbon trading will result in less carbon additionality. Finally, when the economic uncertainty is incorporated into the decision making, the results tend to be sustained albeit carbon additionality is slightly reduced.

Driving the environmental extra mile – Car sharing and voluntary carbon dioxide offsetting

• CO 2 compensation behaviour is examined for the first time in a car sharing setting. • We analyse the dataset of a German car sharer by using machine learning. • Price, mileage, age, education level and place of residence are statistically significant predictors for voluntary carbon offsetting. • Gender is not a statistically significant predictor for voluntary carbon offsetting. • We provide insights into politics and business based on a precisely defined target group. Sharing seems a key feature of transforming linear consumption to a more environmentally friendly system. This is especially applicable to car sharing. The aim of this study is to find out which factors influence environmentally friendly behaviour and how strongly. 13,629 journeys of a German car sharing provider specialised in the transport of goods and larger groups of people are evaluated. The focus is on the possibility for customers to offset their carbon footprint by voluntarily making their journeys climate neutral. Considering socio-economic characteristics, a Light Gradient Boosting Machine (LightGBM) model is applied to analyse variables which influence environmentally friendly behaviour. Age, place of residence, mileage driven, and education level have a statistically significant influence in predicting whether a customer will voluntarily offset CO 2 or not, in contrast to gender. These findings have societal and political implications which could be used for future policy making.