Over the past year, a record volume of carbon offsets has been transacted. Mopping up 76 million metric tonnes (MtCO2e) of greenhouse gases (GHGs) and costing a mere 379 million US dollars to do so, are we any closer to making carbon a real market commodity?
Despite the upbeat trends, most transactions appear to be bilateral agreements between governments as oppose engaging the main emitters of carbon-the private sector.
Not only does this mean there is no real demand for carbon offsetting, but makes it a risky one to invest in. As the Liberian case study shows, if nobody bought the credits from the fifth of its forest leased to the British company, Carbon Harvesting Corporation, the contract would leave the government liable to payments worth $2.2 billion a year in compensation. That would amount to more than the country’s entire GDP.
It seem to me that without dealing with the main drivers of carbon emissions, that of increased demand and population growth, we are in fact no closer to tackling the issue of climate change.
Governments played an important market role in 2013, as both offset buyer and supplier, while private sector-led offset demand fell by 46% to 35 MtCO2e.