Mobilizing Voluntary Carbon Markets To Drive Climate Action

Businesses are increasingly turning to voluntary carbon markets to meet their climate goals.

Companies are acutely and increasingly aware of the need for climate action. While companies design and implement long-term internal decarbonization strategies, many are looking to make immediate and meaningful progress on their climate change commitments through carbon markets.

What is a Carbon Market?

A carbon market refers to a market in which carbon credits are sold and retired for voluntary or compliance purposes. Demand for voluntary offsetting is driven by organizations and individuals that take responsibility for offsetting their own emissions on a voluntary basis to meet sustainability goals. Compliance carbon markets require regulated entities to buy and surrender emissions permits or allowances to comply with a national or international regulatory requirement (e.g. the EU ETS).

Carbon credits—or offsets—are one way for companies to reduce their emissions in the near term. Purchasing high-quality voluntary carbon credits to offset emissions allows companies to reduce climate-warming emissions faster, stimulate innovation, help drive investment in much-needed carbon reductions and unlock more ambitious and impactful climate goals.

To meet this challenge, EDF, with expert support from ENGIE, brought together influential stakeholders and thought leaders in the field of voluntary carbon markets—including representatives from businesses, environmental groups and standard-setting bodies. The initiative resulted in a set of recommendations for aligning voluntary carbon investments with the demands of climate science and the ambitious goals of the Paris Agreement.

The recommendations cover:

• How carbon offsets can make a credible contribution to climate strategies.
• Advances in quality and transparency necessary in the post-2020 context.
• The urgency of continued investment in high-quality emission reduction, removal, and avoidance.
• How voluntary offset markets might eventually dock into international accounting and transparency systems under the Paris Agreement.

These recommendations lay out a path for businesses to take credible and Paris Agreement-aligned climate action, and to inform climate strategies and guidance for high-quality carbon markets that contribute to global climate goals.

As part of this initiative, EDF and ENGIE, with the support of High Tide Foundation, also developed the following briefing papers to inform the recommendations:

• What Does the Science Tell Us? [PDF]
• Trends in the Voluntary Carbon Markets: Where We Are and What’s Next [PDF]