Voluntary market continues to grow: observers

The voluntary carbon market will continue to grow this year, despite the weak economy.

Carbon market participants said at the launch of a new report on the state of the voluntary market Wednesday they expect the market to grow in 2009, albeit at a slower pace than 2008.

The value of the voluntary carbon market doubled to $705 million in 2008 from the previous year, with over 120 million credits transacted, according to a report released last night by Ecosystem Marketplace and New Carbon Finance.

But already in the first few months of 2009, “volumes have gone down considerably,” said Milo Sjardin, head of carbon services for North America at New Carbon Finance.

Maturing

Nonetheless, Sjardin said the voluntary market is “maturing rapidly,” with infrastructure expanding, transparency improving, and project design standards to ensure the environmental integrity of carbon credits “consolidating.”

Despite evidence of a drop off in buying of voluntary carbon credits in the first half of the year, Helen Robinson, CEO of environmental markets registry TZ1, said she has seen a dramatic increase in voluntary market activity.

“Since January, there has been a monumental increase in participation in the voluntary carbon market,” Robinson said, noting a surge of activity from North American clients.

She said she has seen six times the number of issuances of voluntary carbon credits at the start of 2009 compared to last year, giving her a “very positive outlook for next year.”

“This year we will see a continuation of a real marketplace as compared to more a ‘do we get into this or don’t we’ type of market,” she said.

Speculators enter

The maturation of the voluntary carbon market has become apparent to intermediaries, such as brokers, who have witnessed a shift in the types of buyers active in the market.

“If you compare this year’s report to last year’s – the shift in the buyers is now towards speculative interest,” said Andrew Kruger, a director at Evolution Brokers.

Last year, he pointed out, voluntary market activity was dominated by pre-compliance buyers looking to acquire credits that can be used in a future mandatory carbon trading programme early.

Despite the poor economy, Kruger pointed out that over-the-counter transactions of carbon credits still grew by 26 per cent.

“The key thing to realise is that markets are becoming much more educated,” he said.