In 2009, the Voluntary Carbon Market experienced its most difficult year, according to “Building Bridges – State of the Voluntary Carbon Markets 2010,” an Ecosystem Marketplace and Bloomberg New Energy Finance joint-report. Despite a tumultuous year for the carbon markets, the market for fuel-switching projects, in particular projects that were validated with both the SOCIALCARBON® Standard and the Voluntary Carbon Standard (VCS), performed exceedingly well.
The study shows that in last year, the average transactions in the voluntary carbon market declined 26% to 94 million tonnes of CO2 equivalent (CO2e) compared to 2008. In monetary terms, negotiations declined 46.8% compared to 2008 to US$387 million. The transactions on the over-the-counter market, however, where SOCIALCARBON® + VCS credits are traded, decreased by 5.5% in volume and 22.4% in price compared to 2008.
Going up – On the other hand, the fuel switching segment, market which Sustainable Carbon is global leader, changed direction in the last year and managed a slight increase in its market share from 1% to 3% (1,1 million tCO2e). According to the research, SOCIALCARBON® credits managed a slight increase in its market share, from 1% to 1,3%, while Greenhouse Friendly, CDM/JI (Clean Development Mechanism / Joint Implementation) and VER+ all saw continued declines in transaction volumes. Combined, they captured less than 1% of the market.
Another sign of growth in the market was that SOCIALCARBON® credits stacked with VCS gained in price. Prices for these credits increased slightly, up 3% from 2008 to an average US$ 7,6 tCO2e in 2009. These projects were price above-average because of the extra social and environmental benefits that they bring to the business and communities where the projects take place.
“Our demand comes from companies seeking credits that have strong social and environmental benefits which complement most companies’ sustainability strategies,” says Stefano Merlin, CEO of Sustainable Carbon, a supplier of SOCIALCARBON credits.
Speaking to the robustness and desirability to use the Standard, the research also indicated that eleven project developers plan to use the SOCIALCARBON® standard in their projects this year.
The reason – The voluntary carbon market’s negative numbers can be attributed to two major challenges. First, in response to the global financial crisis, companies cut back on discretionary funding for corporate social responsibility initiatives, including offsetting emissions. And secondly, the prospects for new compliance demand remained uncertain. In 2009, suppliers reported a total volume of 93,7 mtCO2e transacted in the global voluntary carbon markets. Compared to the 126,6 mtCO2e transacted in 2008, volumes declined by 26% although 2009 market volumes were still 39% above 2007 levels. It is precisely this reason that the market remains bullish about prospects for growth in 2010.
