Wind projects, cookstoves in Africa, and preserving forests all got big boosts in 2011, when the market for voluntary carbon offsets hit $576 million in transactions – a 3-year high.
The biggest year so far was in 2008, with a record $776 million, according to the 6th "State of the Voluntary Carbon Markets" report, released by Forest Trends’ Ecosystem Marketplace and Bloomberg New Energy Finance.
What are offsets? When an entity sets a target for reducing greenhouse gas emissions, they do so by making internal changes, working with their supply chain, and purchasing offsets to make up whatever is left. That money goes directly to finance carbon reduction projects, such as forest preservation or renewable energy projects, often in developing countries, where the funds are lacking without them.
For example, the 1300-member Paiter-Surui tribe in Brazil is the world’s first indigenous tribe to earn carbon credits for keeping their forest in tact – preserving their way of life and creating a model for how to preserve rainforests.
And thanks to carbon credits, 2.2 million people – about 25% of Rwanda’s population – are about to get clean water and energy.
In fact, clean cookstove, water purification and forestry projects in Africa surged more than 40%. They also have numerous social benefits – such as less time spent gathering wood, improved indoor air quality and local employment.
Surprisingly, there’s been a significant increase in demand from the US, which doesn’t even having pending regulations, much less a carbon market, which usually drives participation. Yet, the US is the world’s largest single-country buyer of voluntary offsets.
Corporations dominate the market, buying 65% of the offsets, led by those in Europe.
There were record sales of offsets from Asian wind farms and coming-of-age of clean development projects in Africa.
Wind farms previously lagged other kinds of project offsets, but in 2011, in response to both economic and competitive conditions, project developers rushed wind projects to market, sparking purchases from cash-strapped buyers who might normally have gravitated to pricier forest-carbon projects.
"Price sensitivities drew some buyers away from the more expensive forestry sector – which nonetheless contributed the highest value to the marketplace because their projects held their own in terms of price," says Ecosystem Marketplace Carbon Program Manager Molly Peters-Stanley.
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