Voluntary Market Research Articles

Service Quality in Voluntary Property Insurance: A SERVQUAL-Based Approach for Poland and the USA

This study investigates the evolving dynamics of service quality in the voluntary property insurance market, focusing on the integration of Polish and USA insurance companies within their respective internal and external environments. The primary aim is to evaluate the competitiveness of this market from the perspective of individual clients, with a specific emphasis on improving service quality. Employing a SERVQUAL-based framework, this research diagnoses key factors influencing service excellence and explores the processes involved in enhancing the quality of voluntary property insurance services in both Poland and the USA.A key achievement of this work is the comprehensive analysis of literature, identifying definitional criteria and conceptual underpinnings related to service quality improvement. The findings highlight potential areas for action and unresolved issues in the ongoing efforts to elevate the standards of property insurance services. As a result, a novel model for improving the quality of insurance services has been developed and described. This model introduces a new perspective on service quality, offering new tools for measuring, analysing, and assessing the improvement process. The study provides valuable insights into service quality enhancement, offering a practical, research-driven framework that insurers and policymakers can leverage for advancing customer service standards in voluntary property insurance.Copyright© 2024 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

Tokenized carbon credits in voluntary carbon markets: the case of KlimaDAO

The voluntary carbon market offers a flexible and cost-effective way to reduce greenhouse gas emissions, which has led to increased interest in these markets. Within the decentralized finance ecosystem, Decentralized Autonomous Organizations leverage the tokenization of carbon credits to enhance efficiency and transparency. KlimaDAO, established in August 2021, aims to accelerate the adoption of carbon markets by integrating blockchain technology to facilitate transparent, secure, and accessible carbon trading. This study analyzes the evolution of KlimaDAO by evaluating its market capitalization, token prices, staking participation, carbon credit retirements, market participation, and concentration. The analysis reveals that while KlimaDAO initially achieved significant engagement and activity, it now faces challenges associated with market maturity and participant retention. Finally, the study highlights the importance of standardization and regulatory frameworks to enhance interoperability, transparency, and legitimacy within the tokenized carbon market.

Unveiling the Nexus: Carbon finance and climate technology advancements

This study examines the dynamic connections between carbon finance mechanisms such as sustainable bonds and emissions trading systems and their role in advancing climate technology. It also explores direct and indirect contributions of carbon finance mechanisms to the progress of climate technology. It employs a causal mediation analysis and high-dimensional fixed-effects panel regression models to derive complex relationships governing carbon finance and climate technology. The findings highlight not only the direct influence of sustainable finance on climate technology but also the indirect pathways through which carbon finance contributes to technological advancements. The analysis demonstrates that sustainable bonds have a positive and direct influence on the advancement of climate technology, whereas a voluntary carbon market indirectly promotes climate-technology development by influencing the implementation of sustainable bonds.

Relegitimising the voluntary carbon market: Visions of digital monitoring, reporting and verification

Relegitimising the voluntary carbon market: Visions of digital monitoring, reporting and verification

Mobilizing carbon offsetting to reduce energy cost burdens: a new approach for calculating and monetizing the offset value of energy efficiency upgrades to low-income housing

Energy-inefficient buildings are a major driver of climate change. The aging, energy inefficient housing occupied by low-income households in the US and other high-income countries is a driver of notable environmental and health disparities as well. Public policies for alleviating the financial and health burdens of energy inefficient housing have existed for decades, but fallen short of reaching most households in need. This paper proposes a promising new approach to filling gaps left by public programs — one that relies on mobilizing the tools of private governance, carbon offsetting and the voluntary carbon market (VCM) to finance energy upgrades for low-income households. We develop a new and readily applicable methodology for calculating energy and carbon savings from efficiency upgrades based on readily accessible publicly available data. Tailored to the needs of estimating energy and carbon savings from efficiency upgrades to low-income units, rentals in particular, this methodology can be fruitfully deployed in monetizing the carbon savings from efficiency driven reductions in household energy use. Specifically, we propose packaging the emission reductions generated through energy savings as carbon offsets, then selling these offsets on the voluntary carbon market to generate financing for energy upgrades to low-income homes not served by public energy efficiency programs. Given the multiple economic and health co-benefits from low-income energy upgrades, we expect that carbon offsets generated through such upgrades will be attractive to many corporate and institutional offset buyers, particularly those who seek to fulfill climate commitments while also advancing economic and human development in their host communities.

Factors influencing farmers' intention to participate in the voluntary carbon market: An extended theory of planned behavior

Carbon sequestration in agricultural soils is essential for sustainable agriculture, contributing to the achievement of the Sustainable Development Goals and combating climate change. The Voluntary Carbon Market (VCM), designed to encourage farmers to implement sequestration practices, is a recent innovation in Europe, in contrast to the well-established American system. Consequently, there is limited understanding of farmers' intentions to participate. The study analyzes farmers' willingness to participate in VCM and the influencing factors through the Extended Theory of Planned Behavior (ETPB). For this purpose, data were collected from 241 Italian farmers located in the Sicily region and the partial least squares structural equation model (PLS-SEM) was applied. The results show that Attitude, Perceived Behavioral Control and Knowledge of VCM have a statistically significant influence on farmers' intention to participate in VCM. In contrast, Subjective Norms and Perceived Environmental Risk do not have a statistically significant influence. Our findings suggest that farmers' intention is strongly influenced by confidence in their capabilities and knowledge of the topic. This should guide policymakers and practitioners to offer extension services and technical assistance, helping farmers understand the potential of the VCM. Indeed, limited knowledge is a major barrier to participation in this initiative.

Monitoring soil carbon in smallholder carbon projects: insights from Kenya

Voluntary carbon market schemes facilitate funding for projects promoting sustainable land management practices to sequester carbon in natural sinks such as biomass and soil, while also supporting agricultural production. The effectiveness of VCM schemes relies on accurate measurement mechanisms that can directly attribute carbon accumulation to project activities. However, measuring carbon sequestration in soils has proven to be difficult and costly, especially in fragmented smallholdings predominant in global agriculture. The cost and accuracy limitations of current methods to monitor soil organic carbon (SOC) limit the participation of smallholder farmers in global carbon markets, where they could potentially be compensated for adopting sustainable farming practices that provide ecosystem benefits. This study evaluates nine different approaches for SOC accounting in smallholder agricultural projects. The approaches involve the use of proximal and remote sensing, along with process models. Our evaluation centres on stakeholder requirements for the Measurement, Reporting, and Verification system, using the criteria of accuracy, level of standardisation, costs, adoptability, and the advancement of community benefits. By analysing these criteria, we highlight opportunities and challenges associated with each approach, presenting suggestions to enhance their applicability for smallholder SOC accounting. The contextual foundation of the research is a case study on the Western Kenya Soil Carbon Project. Remote sensing shows promise in reducing costs for direct and modelling-based carbon measurement. While it is already being used in certain carbon market applications, transparency is vital for broader integration. This demands collaborative work and investment in infrastructure like spectral libraries and user-friendly tools. Balancing community benefits against the detached nature of remote techniques is essential. Enhancing information access aids farmers, boosting income through improved soil and crop productivity, even with remote monitoring. Handheld sensors can involve smallholders, given consistent protocols. Engaging the community in monitoring can cut project costs, enhance agricultural capabilities, and generate extra income.

Potential and goal conflicts in reverse auction design for bioenergy with carbon capture and storage (BECCS)

Bioenergy with carbon capture and storage (BECCS) is considered as a future key technology to provide baseload electricity, heat, pulp, paper, and biofuels, while also enabling atmospheric carbon dioxide removal (CDR). Sweden seeks to lead the way in bringing this technology up to scale, introducing a EUR 3.6 billion reverse auction scheme to facilitate market entry of companies producing BECCS. We explore instrument design preferences among politicians, regulators, and prospective BECCS operators to identify trade-offs and explore feasible policy design. Based on 35 interviews with experts in the latent BECCS sector in Sweden, we identify under which circumstances prospective operators would be willing to place bids and discuss how actor preferences both align with and challenge auction theory. The analysis concludes that at least four dilemmas need attention. These concerns how to: (1) balance the state’s demand for BECCS to be implemented already in 2030 against the prospective BECCS operators’ fear of the winner’s curse, i.e., a fear of bidding for a contract that turns out to be too costly to implement; (2) allocate contracts at the margin of the auctioneer’s demand for BECCS without driving up costs; (3) design compliance mechanism to achieve effectiveness without undermining efficiency, and; 4) integrate the auction with the voluntary carbon market—if at all—in a manner that safeguards the environmental integrity of the auctions.

No pain, no gain? Simulation of carbon reduction potential and socioeconomic effects of voluntary carbon trading in China during 2021–2060

Voluntary carbon market has become a key mechanism of stimulating carbon emission mitigation actions globally. In this study, we calculate the emission reduction potential of Carbon Generalized System of Preferences (CGSP), a dominated voluntary carbon trading mechanism in China, including on-going projects of forestry carbon sinks, waste clothes reuse, installation of distributed photovoltaic power generation system, and usage of energy-conserving devices, as well as other extended methods for their future mitigation potentials. We employ a computable general equilibrium model to delve into the effects of CGSP mechanism on carbon price, economic growth and household consumption, assessing its impact on the equitability of social welfares between urban and rural residents during 2021–2060. Our results indicate that employing the current methods for CGSP would lead to around 5.0 Mt CO2 reduction annually. since 2018, whereas adopting the extended methods would yield reductions of 157.1 Mt. Promoting forestry carbon sinks and energy-conserving appliances offers the most prominent emission reduction, while low-carbon travel shows the biggest potential going forward. CGSP will loosen carbon constraints on industries in the market and result in a lower carbon price, reducing the economic cost of carbon trading without compromising China's carbon peaking and carbon neutrality goals. Supplementing CGSP could reduce the GDP loss by up to 0.2 trillion Yuan by 2030 and 0.9 trillion Yuan by 2060, compared to the sole operation of compliance carbon trading market. Provided fiscal stimulus policies, CGSP will further reduce GDP loss by 1.1 trillion Yuan in 2060. Different fiscal stimulus scenarios have a strong implication on welfares of urban and rural residents, wherein monetary equivalent incentive will reduce urban-rural income gap by up to 718 Yuan/capita in 2060.

Demand for low-quality offsets by major companies undermines climate integrity of the voluntary carbon market

Most companies include carbon offsets in their net-zero strategy. However, many offset projects are poor quality and fail to reduce emissions as claimed. Here we focus on the twenty companies retiring the most offsets from the voluntary carbon market over 2020–2023. We examine if their offsets could be considered high quality and likely to benefit the climate. We curate an original company-level dataset to examine quality and climate benefits across four dimensions: (1) use of offsets from low/high-risk project types; (2) age of projects and credits; (3) price of credits; and (4) country of implementation. We find that companies have predominantly sourced low-quality, cheap offsets: 87% carry a high risk of not providing real and additional emissions reductions, with most offsets originating from forest conservation and renewable energy projects. Further, most offsets do not meet industry standards regarding age and country of implementation. These findings provide further evidence that the voluntary carbon market is not supporting effective climate mitigation. Particularly, we show that its persisting quality issues are exacerbated by the demand for low-quality offsets by individual companies.

The inclusion of improved forest management in strategic forest planning and its impact on timber harvests, carbon and biodiversity conservation

In forestry, although the so-called nature-based climate solutions have usually been focused on the calculation of carbon captured in new afforestation projects, it should be noted that the increase in carbon associated with improvements in their management (Improved Forest Management) can also be computed. This type of carbon is not usually integrated into strategic forest planning models, nor has its possible degree of conflict with other regulation ecosystemic services, like biodiversity conservation, been verified. In this research, those two issues have been approached by calculating a baseline in an emblematic forest with an extensive forestry history. For this purpose, we have designed two scenarios, i.e., one linked to its current management (Business As Usual, BAU) and another justified by the inclusion of Improved Forest Management (IFM). The results reveal a notable conflict between the carbon captured and the values of the indicators used to measure biodiversity. In order to reach a compromise between both scenarios, a multi-criteria model has been proposed that could be more attractive than the above ones. In addition, the carbon profit credits in the first ten years have been computed under the IFM scenario; the latter could be, a priori, an object of transaction in a voluntary carbon market. In conclusion, our model generates feasible solutions that allow the integration of IFM into strategic planning. Besides, those solutions show interesting tradeoffs between carbon and biodiversity. This discord must be distinguished by the current state of the forest and its expected growth, as well as their influence on the values associated with provision ecosystem services, such as the present net value associated with timber harvests.

THE FINANCIAL IMPACT OF CARBON EMISSIONS ON POWER UTILITIES UNDER CLIMATE SCENARIOS

Power utilities, especially those that generate electricity by burning fossil fuels, produce significant amounts of carbon emissions. Mitigation of [Formula: see text]-equivalent ([Formula: see text]) emissions can be achieved by replacing power plants with renewable power installations and by adopting carbon-sequestration technologies. Physical upgrades are expensive, but carbon taxes, or the purchase of certificates and allowances on a voluntary carbon market, can be costly, too. Carbon costs may increasingly become a threatening liability for power utilities, eating into profits and undermining the financial viability of emission-intensive electricity generation. Thus, we consider an asset-and-liability, structural firm model to investigate the creditworthiness of a generic power utility. The utility’s assets dynamics are driven by the financial returns generated from the sold electricity for a set tariff which is modeled by a simple stochastic process. The liabilities not only depend on fuel, running, and depreciation costs, but also on the costs of [Formula: see text] emissions. As a case study, we consider Eskom, the South African power utility. We show the evolution of Eskom’s default probability under various fuel mix plans and technologies (as per SA’s Integrated Resources Plan (IRP) 2019), and under the Network for Greening the Financial System (NGFS) carbon price scenarios. The obtained results and insights present a trying path ahead, especially for carbon-intensive power utilities.

A novel deforestation risk and baseline allocation model for the next generation of nested REDD+ projects

Nature-based solutions that use a counterfactual scenario depend heavily on the methodology used to determine the business as usual (BAU) case, i.e., the “baseline.” Reducing emissions from deforestation and forest degradation (REDD+) projects traditionally set baselines using a “reference area” as a control for estimating BAU deforestation and emissions in the treatment (project) area. While the REDD+ market is shifting from project-based to nested approaches as countries increase their efforts to meet nationally determined contributions (NDCs) to the Paris agreement’s global climate target, methodologies for allocating national baselines are not yet formalized and tested, despite an urgent need to scale the market. We present a novel method for mapping deforestation risk and allocating national forest reference emission levels (FREL) to projects: baseline allocation for assessed risk (BAAR). This approach provides a spatial predictor of future deforestation using a dynamic vector, and a method for allocating a FREL to differentiated risk areas at the project level. Here, we present BAAR using 34 REDD+ projects in the Democratic Republic of the Congo (DRC). We demonstrate the importance of risk-based FREL allocations to balance fitness for purpose and scientific rigor. We show how BAAR can be used by governments to focus voluntary carbon market finance in areas at highest risk of imminent deforestation, while maintaining alignment with nationally determined contribution (NDC) goals.

Brazil’s Economic Potential with Carbon Credits: A Study of the “Mata Do Buraquinho” – Brazil

Introduction: Public (state) concern about the climate has, in turn, catalyzed the creation between global governments and transnational companies, and these models are subject to risk-consequence type measures, the conduct of which is now known as the voluntary carbon credit market. The article in question deals with one of the most talked-about economic instruments for combating global warming in international politics, the carbon credit market. Objective: The article in question proposes a reflection on this subject, which has been so much talked about in recent years, focusing on its economic perspective and using a case study methodology to support its results. Theoretical framework: The mitigation of greenhouse gas (GHG) emissions is a necessary condition to lead to a low-carbon economy, and the best way to achieve this is through the application of economic instruments. Such as putting a price on carbon, making this transition quicker and less costly from a social point of view. In this way, with a higher relative price for pollution, private agents will choose between paying for or reducing pollution, comparing the marginal cost of control with the price of carbon. Methodology: Initially, a bibliographical review was made of the economic theoretical framework that underpins one of the instruments considered most efficient in combating climate change, the carbon credit market. In another part of this work, a practical application of this mechanism was carried out, using an evaluation methodology for an application of this instrument in the municipality of João Pessoa -PB, which stands out for being one of the most wooded cities in Brazil and for having some conservation units in its territory, such as the one used in the work, the Mata do Buraquinho Wildlife Reserve. Results: The sale of the ecosystem services that the forest offers, in this case its capacity to absorb CO2, could improve the conditions for maintaining the area and perhaps attract more people to visit it. Thus, the value found for “Mata do Buraquinho” was R$61,968.26.

‘This is not a forum for reducing poverty’: the moral economy of the voluntary carbon market

ABSTRACT Carbon offsetting is premised on the ability to commensurate carbon, so that emissions and reductions across different contexts can be made equivalent and therefore interchangeable. The voluntary carbon market has been promoted as being able to reduce emissions and achieve co-benefits. Through interviews with 35 market participants, I map out different moral understandings that market participants have about offsetting and its goals. While all actors agree that proving real emissions reductions is essential, they differ in terms of the importance of co-benefits to the market. These different conceptions of climate responsibility and the tensions between them are considered in the context of the need to make offsets and emissions commensurable.

Enriching Carbon: Surplus Value Creation and Capture on the Voluntary Carbon Markets

AbstractThis article examines the creation and capture of surplus value in the voluntary carbon markets to show the importance of narratives and networks in justifying price. Rather than a push towards commensurability in carbon markets, it points to the emergence of profitable business models based on the enrichment of credits. Enrichment focuses not on processes of standardisation associated with commodity production, but on the creation of difference, uniqueness, and provenance. Drawing on ethnographic fieldwork and the marketing of a REDD+ project in San Martín, Peru, the article argues that the creation of surplus value in the voluntary market lies chiefly in the ability of vendors to create, manage, and sell narratives. A focus on the enrichment of carbon‐as‐an‐asset thus shows that narratives and networks go beyond performativity but are central to value construction, privileging certain actors and forms of labour and highlighting emerging forms of exploitation in green markets.

Decarbonizing Water: The Potential to Apply the Voluntary Carbon Market toward Global Water Security.

The increase in global water insecurity is one of the first perceivable effects of climate change. Two billion people are now without access to safe drinking water, and four billion experience water stress at least once a year, primarily in low per-capita emission countries. This nexus between climate change and water insecurity has significant implications for the global economy, with the water sector contributing 10% of global emissions. Though traditionally a local issue, climate finance mechanisms like the voluntary carbon market (VCM) present opportunities for a global, sustainable, performance-based funding stream to address water insecurity. Since 2010, water-related carbon projects have yielded over 45 million emission reduction credits. Our analysis estimates a global potential of over 1.6 billion tCO2e per year across various water project subsectors. At a $10 per credit average, this could attract over $160 billion in investments over the next decade, enhancing global water security. However, barriers like high intervention costs and limited technologies hinder widespread implementation, creating a tension between standardized and bespoke credits. We present case studies, spanning drinking water initiatives to the wastewater treatment sector that illustrate VCM's role in channeling private sector capital for water security in climate-vulnerable regions.

Synthetic natural gas in the private heating sector in Germany: match or mismatch between production costs and consumer willingness to pay?

BackgroundThe residential heating sector in many European countries requires a fundamental transformation if it is to become climate neutral. Besides the introduction of efficiency measures and updating heating systems, scholars and practitioners consider replacing fossil fuels in existing heating systems a viable approach. Drop-in renewable gases such as biomethane and synthetic natural gas (SNG) cause considerably fewer carbon dioxide (CO2) emissions than natural gas and can be used in natural gas boilers, the dominant heating system in many European countries. To move the ongoing debate around e-fuels forward, this study reports on a Discrete Choice Experiment with 512 respondents in Germany that analyzed consumer preferences and willingness to pay (WTP) for SNG. I build on these insights by comparing WTP to the production costs, making evidence-based decision-making possible.ResultsThe results show that consumers prefer renewable gases over natural gas. Comparing the two types of renewable gases, SNG and biomethane, reveals that consumers clearly favor the latter despite the criticism it has come under in the last 10–15 years. Consumers show a surprisingly high WTP for increasing shares of SNG, with premia of 40 to almost 70% over a natural gas-based tariff. Comparing production costs to the WTP reveals that only tariffs with small shares of SNG (5% and 10%) can be offered at cost-covering prices.ConclusionsGiven the urgent need for a fundamental transition of the residential heating sector, marketers and policymakers should consider carefully whether it is worth channeling a rather unknown and expensive product like SNG into the voluntary market for heating gas, especially as biomethane is already established in the market and clearly a cheaper and more popular alternative.

Toward global net zero: The voluntary carbon market on its quest to find its place in the post‐Paris climate regime

AbstractThis focus article traces the evolution of the voluntary carbon market (VCM), putting emphasis on the more recent developments following the adoption of the Paris Agreement in 2015. It focuses on the interplay between the privately governed VCM and the global climate regime under the United Nations (UN). For years, the VCM and the UN carbon market operated in parallel and mutually influenced each other. The adoption of the Paris Agreement, however, marked a turning point for the VCM. It triggered the proliferation of net zero targets, sparking the interest in the VCM as a supplier of carbon credits to offset companies' remaining emissions. At the same time, the global scope and ambitious targets set by the agreement have put the future of the VCM in limbo, raising concerns about double claiming and more generally, questioning the adequacy of offsetting. Considering these challenges, numerous stakeholders have started a process to redefine the rules of the market to ensure its credibility and legitimacy. While some areas of convergence were identified, the VCM's private governance has long been unable to address the question of how to deal with double claiming and the claims companies should be allowed to make. In this situation, signals from international policy and regulation under national policy point the way forward for the VCM. By moving from offsetting toward a contribution claim model, the VCM may overcome its “identity crisis” and find a new place within the broader climate change regime.This article is categorized under: The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior Policy and Governance > Multilevel and Transnational Climate Change Governance Policy and Governance > Private Governance of Climate Change

Balancing the books of nature by accounting for ecosystem condition following ecological restoration

Demand for ecological restoration of Earth’s degraded ecosystems has increased significantly since the adoption of The Kunming-Montreal Global Biodiversity Framework in December 2022, with target 2 aiming to ensure that at least 30% of degraded ecosystems are under effective restoration by 2030. More recently, in December 2023, the Australian Parliament introduced the Nature Repair Act, which establishes a framework for the world’s first legislated, national, voluntary biodiversity market. How can the effectiveness of these ambitious targets be measured? Natural Capital Accounting (NCA) provides a framework to measure changes in ecosystem condition that is applicable across ecosystems and potentially catalogue effects of restoration interventions to drive investment, improvement to practice, and ultimately, to better protect the Earth's ecosystems. However, the framework has not been tested in this context. In this progressive approach, we populated the leading global NCA framework with ecological data to quantify changes in ecosystem condition after restoration. In principle, NCA is fit for purpose, however, methodological refinements and ecological expertise are needed to unlock its full potential. These tweaks will facilitate adoption and standardisation of reporting as efforts ramp up to meet ambitious global restoration targets.