Book Review

Voluntary Carbon Markets

An International Business Guide to What They Are and How They Work

Written and Edited by Ricardo Bayon, Amanda Hawn and Katherine Hamilton – Earthscan, 2009

This is a second, revised and updated, edition of a book first published in 2006. It is clearly aimed at potential users of VCMs (Voluntary Carbon Markets, i.e. ‘carbon offsetting’), and overall, advocating their use; but it aims to give an honest appraisal of the complex issues involved.
To that end, its writers have included articles written by an economist, a conservationist, a project developer, an NGO activist, a retailer, a credit originator, an investor, a buyer and a banker.

It compares the voluntary market with the regulated one, describing the influences and conflicts between them, with the various contributors offering widely divergent views, but in the main, concluding that while involving a smaller total value, the voluntary sector makes a valuable complement to the regulated one.

While one aim of the participants is clearly profit, ‘greenwash’ as well as genuine concern for reduction of greenhouse gasses are also part of the picture; but what is largely overlooked by most of the contributors is the effect on the poor in ‘developing countries’ who are the ones primarily affected, but who generally get little reward or compensation. Quote: ‘Even when local capacity has been developed, high costs for verification and certification of emission reductions can result in more carbon money going into the hands of consultants from other countries than to local people planning and protecting trees’; etc.

One issue much discussed in the book is this high cost of verification and monitoring, to ensure that claims are valid. This can vastly outweigh the actual costs involved in the carbon-offsetting, and one advantage of the voluntary sector is the lower cost of verification and monitoring and its greater flexibility, as compared with the regulated market, though this leaves more room for doubts about its validity.

The authors argue that accounting systems for carbon credits have become increasingly sophisticated, with independent verification and project documentation open to third party challenge, and that in contrast, claims of ‘internal’ emission-reductions have far fewer checks and balances.
The authors recognise that much more needs to be done to avert catastrophic climate change than can be achieved in total by ‘carbon trading’, but they argue that the voluntary market can make a significant contribution. They argue that the growth of this market is fast accelerating – ‘from a few million tons three years ago to over 100 million tons in 2008’. They are well aware of the need for credibility of claims, but fear that too much emphasis on this could lead to too high costs for project developers: ‘it would be a shame if the old chestnut of the agricultural community – that there is money to be made in food, just not in growing it – were one day to apply to offset project providers in developing countries’. This appears to be a serious issue; as in so many other issues, the profits to be gained generally outweigh concern for planet and the poor of this world.
There is serious concern expressed by many (which I share) about the whole idea of ‘carbon offsets’. For anyone considering buying some, either individually or as a company, this book can offer a great deal of food for thought. It is a subject which deserves serious exploration, and this is given by the book, though without any firm conclusions.

Brian Leslie