25 September 2017

Voluntary carbon high-flyers preparing for market's take-off

The promise of future demand from the aviation industry and new types of financing are fuelling optimism in the voluntary carbon market, the top firms in Environmental Finance's 2017 Voluntary Carbon Markets Rankings say.

More than 1,000 responses were received as part of the 8th annual rankings, which polled the market as to who are the most highly regarded players across 16 categories. The survey found market sentiment to be generally positive, with winners agreeing the future for carbon offsets is bright.

This is despite the findings of the State of the Voluntary Carbon Markets 2017 report by Ecosystem Marketplace, which said the amount spent fell in 2016 to $191.3 million, which offset 63.4 million tonnes of carbon dioxide equivalent (MtCO2e), compared with $278 million to recover 84 MtCO2e in 2015.

Edward Hanrahan, director at Climate Care, which claimed the title of Best Project Developer in Public Health, said that, overall, there has been more investment into projects but the financing is taking a different form, and the carbon credit instrument on its own is being utilised less, which may help explain the 31% decrease in the amount spent on offsets, he said.

Project developer South Pole Group, the winner of five of this year's awards, regained the title of Best Project Developer Overall from EcoAct. Until it was beaten into second place by its French rival in 2016, South Pole had won the category for five successive years.

South Pole was also voted Best Project Developer in Forestry and Land-Use, Best Project Developer in Renewable Energy, Best Trading Company, and was joint winner of the Best Offset Retailer category, alongside Natural Capital Partners.

Kathy Benini, managing director and global head of environmental registry and auctions at IHS Markit, which claimed the title of Best Registry Provider for the eighth straight year said: "I think the market is taking off, I think we're at an inflection point."

The company has seen a 61% increase in issuance of Verified Carbon Standard credits in the first six months of this year compared to the same time last year.

Many of the 2017 survey winners highlighted aviation as a promising emerging market for voluntary carbon offsets, as the International Civil Aviation Organization looks to create its own scheme, known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Marion Verles, chief executive of Gold Standard, which claimed the crown for Best Voluntary Standard, said CORSIA "will definitely be a very important source of demand for carbon credits", but cautioned that "there is a risk that the level of ambition is not going to be sufficient… We hope to see very stringent criteria for environmental integrity, paired with sustainable development considerations."

Meanwhile, Martijn Wilder, partner and head of global environmental markets and climate change at Baker McKenzie, the winner of Best Law Firm, said the recommendations of the FSB's Task Force on Climate-related Financial Disclosures are also likely to increase demand from companies for carbon offsets.

For a full list of winners, see the table below:

Best Trading Company   South Pole Group First Climate
Best Advisory/Consultancy Natural Capital Partners EcoAct
Best Law Firm Baker McKenzie Norton Rose Fulbright
Best Verification Company EPIC Sustainability SCS
Best Wholesaler First Climate South Pole Group
Best Broker Numerco Evolution Markets
Best Project Developer, Renewable Energy South Pole Group EcoAct
Best Project Developer, Energy Efficiency EcoAct South Pole Group
Best Project Developer, Forestry and Land-Use South Pole Group Clean Air Action / Terra Global Capital
Best Project Developer, Public Health Climate Care South Pole Group
Best Project Developer, Overall South Pole Group Clean Air Action
Best Offset Retailer South Pole Group / Natural Capital Partners Climate Care
Best Registry Provider   IHS Markit APX
Best Voluntary Standard Gold Standard VCS
Best Offsetting Project Wildlife Works – Kasigau Corridor Project Livelihoods Fund/ Climate Pal - Hifadhi cookstoves project
Best Corporate Offsetting Programme Qantas – Future Planet scheme La Poste