St State of th e of the V e Volun oluntary Ca y Carbon on Ma - PDF document

St State of th e of the V e Volun oluntary Ca y Carbon on Ma Market kets 2 s 201 015 Web ebinar nar Q&A &A Documen Document: The following questions were collected during the the State of the Voluntary Carbon Markets 2015 webinar, presented June 25, 2015. Subsequent answers include responses by the report ’ s lead author, Kelley Hamrick, along with the webinar panelists: Sar arah ah Leugers Leugers | Director of Marketing and Communications, The Gold Standard Foundation David id A Ant nton onioli ioli | Chief Executive Officer, Verified Carbon Standard Soph ophy G y Gree eenh nhalg lgh | ICROA Programme Manager, IETA Both webinar slides and the full report can be found here . Ques uestions ions a abou out t the he rep epor ort: 1) Why do VCU transactions outpace issuances? (slide 18) 2) For the buyer figure, $10.4 million transactions are tracked by the public sector. If that’s the case, why is the red ‘Government’ sector slice in the donut chart in the top right so small? (slide 19) 3) What’s the distinction between overall value and value to projects? Where else does the value go if not to the projects? (slide 21) 4) Can you provide the average price per standard, as has been provided in past years? (missing slide) Ques uestions ions f for or t the panelis he panelists: 1) What are our hopes/expectations for COP21 in Paris? How can this COP influence the voluntary market? 2) With the average price decrease, how do you motivate and explain it to project developers? Do you think PDs will continue to get involved in the market and continue with their certification process? 3) What are the panelist’s efforts to create demand? 4) What is the attitude of buyers? Are they looking at short term (quick fix for CSR objectives under 2 years) or long term (offsetting will always make sense to their strategy, 5- 10 years’ time)? 5) Is there any discussion about forest bonds to help the longer-term finance of real- scale REDD+?

Ques uestions ions a abou out t the he rep epor ort: 1) 1) “ Why hy do do V VCU tr U trans ansact ctions ons s signific ignificant antly ou ly outpace pace ac actual ual VCU i U issuan uances ces? My My under understand anding is ing is tha hat if a if a V VCU i U is s sol old t d to o a r a ret etai ailer, a ler, and t nd then s hen sol old a d again t gain to a o an end n end-us user, , this his i is co coun unted a ed as t two wo V VCUs t Us tran ansact cted. ed. Could ould this his dif differ feren ence a ce als lso o be a e attrib ibut uted t ed to t o the he signing igning of mult of multiyea iyear co contrac acts, wh , wher ereas eas a t a ten en-ye year ar co cont ntrac act for for 10 10 mill million V ion VCUs w Us woul ould d co count unt a as 10 10 mill million V ion VCUs Us t tran ansac acted in 20 ed in 2014 14? ” Yes, that is correct – we track transactions, defined in our report as occurring at “ the point of contract between the buyer and seller” . This means two things: 1) An offset can be transacted multiple times from issuance to retirement. For example, one reported transaction could be from a project developer to a retailer. The retailer could then report another transaction between their organization and an end user buyer (which then retires the offsets). We track market turnover and the total volume of these many transactions as a measure of market health. We do not track the individual “life” of an offset from creation to retirement. 2) The point of contract is not necessarily the same as the year when the delivery of offsets (or even the payment) occurs. A case in point is the REDD Early Movers agreement, in which the 10 MtCO2e agreement between Germany, Norway and Ecuador does not mean that those tonnes have been generated yet. Both payment and delivery will occur when the emissions reductions have been verified and are ready for issuance, but the financial commitment is there. When those offsets do change hands, we would not count it in any future market report. We often have people ask us why we don’t measure individual offsets instead of transactions and we tried to address why this is so difficult in the report: What is the voluntary market’s environmental im impact? Offset transactions, issuances, and retirements are all important metrics for market size – but none of them is an exact indicator of environmental impact. Transactions are a measure of the health of the market (indicating new demand for offsets year-on- year), but a single offset may be traded more than once. Issuances are a measure of emissions reductions that have been verified as occurring, but that number may not capture all of the emissions reductions that resulted from the carbon finance – especially since many projects only issue offsets when they have a willing buyer. Retirements are a measure of the offsets that can no longer be traded and are therefore permanently “removed” from the atmosphere, but some end -users choose not to retire their offsets (even if they do not plan to resell them) – and retirement can occur years after an actual transaction. In this sense, tracking the exact environmental impact of the voluntary carbon market year-on-year is elusive, but undoubtedly exceeds the volume of offsets that have been transacted historically.

2) ) “ Fo For t the b he buye uyer figur figure, e, $10 10.4 m .4 million t illion trans ansac action ons ar are e tracked cked b by t y the pu he public s ic sec ector or. If . If that’s the case, why is the red ‘Government’ sector slice in the donut chart in the top right so s o small mall? ” Buyer Breakdown, by Experience, Motivation, Status, Sector and Type, 2014 The Buyer Profit Status figure is the only figure in the table that includes the REDD Early Movers ($10 M) agreement, which was classified as “ public sector ” . The agreement distorts all of the more nuanced buyer data so we excluded it from all further analysis except the overall buyer amounts. There is in fact very little public sector influence beyond REM, however, with the private sector otherwise behind 95% of all transactions. 3) ) “What’s the distinction between overall value and value to projects? Where else does the value go if no he value go if not t to o the he projec projects? ” We broke out the transaction types in the regional section to specify the value of payments that go directly to projects (i.e. the primary market: the initial transaction of offsets from the project developer to the first buyer in line) versus the overall market value which can include additional transactions reported by retailers and/or brokers when they resell offsets. 4) ) “ Can y an you provi ou provide t de the he aver average pric age price pe e per stand andard, a d, as ha has been p een provide ovided in pas in past yea years? ” As in the past, we calculated those averages, but chose not to include it in the main section of report due to length. You can find average prices by standard in the report’s Annex 2.