Voluntary carbon market stagnates: report

Sales and investment in the voluntary carbon market have stagnated in the last six months under the impact of federal government policy confusion, according to the latest update of the Carbon Offset Guide.

Developed by Global Sustainability at RMIT University and EPA Victoria, the Carbon Offset Guide is the most comprehensive and independent directory of Australian offset providers, featuring details of prices, project locations, descriptions and accreditation standards.

Global Sustainability at RMIT Director Caroline Bayliss said many of the 91 providers listed in the latest update had reported that sales and investment have stopped growing.

“Based on our comprehensive surveys and follow-up conversations with offset providers, it is clear that many are pessimistic about the future of Australian abatement activity - that is, offsets produced from local projects,”  Bayliss said.

“Many sellers of locally sourced offsets are telling us that there is simply no business, due to the impact of recent federal government policy changes.

“The businesses, governments and households that want to purchase locally sourced offsets are also telling us that they are losing confidence in the market.

“The clear consensus among the providers and consumers we deal with is that the federal government must act urgently to fix these problems, or risk the failure of Australian companies delivering domestic voluntary carbon abatement - and the loss of jobs, innovative technologies and skills developed by those businesses.”

The federal government’s National Carbon Offset Standard (NCOS) - which came into effect on 1 July - only covers abatement that does not count towards Australia’s targets under the Kyoto Protocol, such as soil carbon projects.

Bayliss said this left many current Australian offset projects, such as forestry and energy efficiency, with no framework for certification.

“Providers are confirming that, at present, they cannot supply any Australian local offsets that would comply with NCOS,” she said.

“The result is that companies and local governments that have made commitments to go ‘carbon neutral’ must now purchase offsets from projects overseas.

“Others that have not yet made such commitments, but want to buy local offsets that make a difference to aggregate global emissions, are reporting that they are simply opting not to purchase offsets at all.”

Bayliss said NCOS had replaced the Greenhouse Friendly program, which has traditionally been the preferred option for certification of Australian abatement projects.

“Many providers have spent considerable effort and expense to achieve certification of domestic projects and abatement under Greenhouse Friendly and, at present, there are no arrangements to recognise this prior certification under NCOS,” she said.

Offset project developers have expressed a distinct lack of willingness to invest further resources required to develop new offset projects and methodologies due to this policy uncertainty, Bayliss said.

“Since there are no established international accreditation methodologies for the projects envisaged under NCOS, providers are not prepared to spend considerable time and effort to develop a new methodology which may or may not gain accreditation under NCOS,” she said.

The policy developments are outlined in the recent updates to the Carbon Offset Guide.

The guide is available online: www.carbonoffsetguide.com.au.