2021 has seen unprecedented growth in the voluntary carbon market, in terms of both volume and value. But while demand — and cost — for high-quality carbon offsets continues to rise, natural constraints within the system mean supply is tightening.
Consequently, it is becoming more and more difficult for individuals and small businesses to access the voluntary carbon offsets market. In response, carbon credit retailers are introducing new solutions that will make entry into this high-growth market easy and comfortable for small business owners and/or individuals, like you and me.
One such innovation is found in cryptocurrency and blockchain solutions. For example, Terrapass, as a long-time sustainability leader, has recently begun offering the Terrapass Coin (TPSC).
Terrapass Coins combine digital technology with environmental action. They offer consumers a simple means to control and connect their efforts to combat climate change and to engage in the scaling voluntary carbon market today.
Read on to understand more about the voluntary carbon market, the rapid growth happening now, and how scaling is creating both challenges and opportunities for buyers and sellers alike. Discover how the Terrapass Coin is today’s unparalleled product for initiating and/or fortifying your own participation in the voluntary carbon offsets market.
What Is the Voluntary Carbon Market?
The Voluntary Carbon Market (VCM) or the voluntary carbon credit market is a system that, traditionally, allows for the buying, selling, and trading of carbon credits in order to offset carbon emissions. Carbon emissions, through vehicle exhaust, manufacturing, home heating, etc., are widely recognized as being responsible for a vast majority of climate-change-causing greenhouse gases (GHGs).
The voluntary carbon offsets market provides a means for countries, companies, and individuals to reduce their carbon footprint, working toward a healthier, more stable planet.
It is described by S&P Global as allowing “carbon emitters to offset their unavoidable emissions by purchasing carbon credits emitted by projects targeted at removing or reducing GHG from the atmosphere.”
Example transactions include carbon producers — individual or commercial — purchasing carbon offsets created by reforestation and land conservation projects (think rainforest protection); by solar, wind, or other renewable energy producers; and by waste-to-energy projects, such as converting methane into electricity.
This activity is encouraged not just by scientists and environmentalists but by governments and industry leaders who are being pushed to meet global goals, such as those set forth by the 2015 Paris Climate Agreement.
Under the international agreement, to which the United States has once again committed, nations are tasked to combat climate change by minimizing global warming, cutting current greenhouse gas emissions in half by 2030, and attaining net-zero emissions by 2050. But policy-making can be difficult and implementation slow.
Alternatively, conducted outside of government or industry mandates, voluntary carbon trading has become an increasingly popular and relied-upon means for both organizational and individual decision-making and action around the goals of climate change prevention and mitigation.
How Does the Voluntary Carbon Market Work?
Having been described as a market system, it is apparent that the voluntary carbon market must revolve around a product or commodity. In this case, that commodity is carbon credits/carbon offsets.
Carbon offsets are created by project developers and are directly tied to the measurable reduction of greenhouse gases (GHGs), such as carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, and perfluorocarbons.
Development projects could include:
Activities that capture and use, destroy, or store greenhouse gases
Efforts to lower GHGs through the reduction of fuel or electricity usage in a particular activity
Programs to reduce carbon emissions by implementing renewable sources of energy, such as solar or wind power, in place of fossil fuels
They range from small community-based projects to large industrial-scale programs.
Credits are verified and granted by government entities and/or third-party authenticators, called “Standards.” Carbon credits are measured in tons of offset GHGs and can then be sold to carbon emitters, in the form of corporate investors, governments, or non-profits — and even individuals — in order to offset their own carbon emissions.
The sale, trade, or investment of carbon offset credits goes through retail traders and brokers, as in any other financial market. Traders purchase the carbon credits from producers, which can then be sold on to the end buyer through large portfolio-style bundles or to brokers for resale.
Carbon pricing varies, but “offset programs issue carbon credits according to an accounting protocol and have their own registry,” according to the World Bank’s carbon pricing dashboard.
In June 2021, S&P Global Platts began publishing daily carbon credit price assessments for both nature-based and household-device-related carbon credit projects, just one more indication of the current burst in voluntary carbon market growth.
Voluntary Carbon Market Growth Skyrockets in 2021
The practice of buying and selling carbon offset credits has become so prominent that a recent report from Ecosystem Marketplace, The State of the Voluntary Carbon Markets 2021, declares that VCMs are “on track to hit $1 billion in transactions this year if current levels of activity and growth continue,” contributing to an “all-time” market value of $6.7 billion.
Data compiled in the report reveals that, as of the end of August 2021, voluntary carbon credit market growth already reflected a 58% increase in value and a 27% increase in credit volume when compared with similar activity in 2020.
And as demand increases so does the cost of carbon credits. The weighted average price per ton continues to rise for credits, whether produced from forestry and land-use projects (rising about 9% since 2019), or from waste capture/disposal activities and clean cookstoves (rising 42% and 16%, respectively, since 2020).
The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), a private-sector multi-continent collaboration sponsored by the International Institute of Finance (IIF), looks even further ahead in its projections, with equally exciting views.
The Taskforce estimates that demand for carbon offsets could hit $50 billion by 2030, a 15-fold increase.
Bill Winters, Chair of the TSVCM and Chief Executive of Standard Chartered, clearly identifies the green business opportunity, explaining, “By scaling voluntary carbon markets and allowing a global price for carbon to emerge, companies will have the right tools and incentives to reduce emissions at least cost.”
But as demand and prices soar, evidence of impressive voluntary carbon market growth, inventory is having a harder time keeping up.
Growing Pains Motivate Innovations in Voluntary Carbon Market
Carbon offsetting projects and carbon credit mining can take a long time to move from conception to productive realization. The lag is particularly great for nature-based projects, such as reforestation efforts that may take years before they are capturing enough CO2 to impact global greenhouse gas levels.
And as the voluntary carbon market grows, the caliber of carbon offsets matters more than ever before. In order to ensure that carbon market products are truly offsetting greenhouse gas emissions, the Taskforce on Scaling Voluntary Carbon Markets is working to bring “greater quality and integrity to VCMs” through the creation of a “global benchmark for carbon credit quality.”
When taken together, the influential pressures of high demand, rising prices, lagging inventory, and more stringent regulation also mean higher barriers for those environmentally conscious actors wishing to find entry into the rapidly growing voluntary carbon market. Participation can be especially difficult for individuals and small businesses.
In order to counter those barriers and bring more consumer-level involvement and direction into the high-growth market, carbon finance leaders are stepping forward with advanced solutions.
Terrapass Coin Is Newest Product in VCM
One notable innovation is the recently introduced Terrapass Coin from Terrapass, which leverages cryptocurrency and blockchain technology in the voluntary carbon market’s arsenal against climate change.
Terrapass Coins (TPSCs) are digital ERC-20 tokens, stored and sent using the Ethereum cryptocurrency and blockchain system.
Each digital coin represents one metric ton (mT) of high-quality carbon offsets and “allows customers to own, buy, sell; also, trade, or offset their carbon footprint by managing the coins through designated Terrapass products,” according to Energy Capital Media. “Consequently, the coin gives them control of their footprint like any other coin.”
Even more, owners of Terrapass Coins can be assured that all of their carbon emissions offsets are of premium quality, all having been verified by accredited and independent third-party verifiers and having met the Terrapass Coin Standard.
Join the Growing Voluntary Carbon Market Today
Voluntary carbon market growth is seeing unprecedented highs as global devotion to fighting climate change through the reduction of carbon emissions increases.
But the laws of supply and demand also mean that entry into and participation in these fast-rising markets is increasingly difficult. To mitigate these barriers, carbon finance innovators, like Terrapass, are actualizing new ways for individuals to be direct participants and decision-makers in the carbon credit markets.
Terrapass’ newest climate-protecting product comes in the digital form of Terrapass Coins (TPSCs), which offer even individuals with no investment experience a means to participate in the high-growth carbon market with a sellable, transferable, giftable investment.
Terrapass Coins are available for purchase now through monthly plans that invite customers to offset between 12 and 36 metric tons each year, the equivalent of planting between 190 and 590-plus trees a year.
Learn more about Terrapass’ newest cryptocurrency product, Terrapass Coins (TPSCs) — a tradable, exchangeable blockchain solution, backed by Terrapass’ guaranteed quality standards. Pick a plan, sign up in minutes, and launch (or increase) your presence in the rapidly growing voluntary carbon market today.
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