Understanding the financial workings of the voluntary carbon market

illuminem summarizes for you the essential news of the day. Read the full piece on Carbon Market Watch or enjoy below:

🗞️ Driving the news: The voluntary carbon market (VCM) is complex, with various players, products, and financial mechanisms involved
• This explainer provides an overview of how carbon credits are financed, traded, and the market's challenges, including the gap between its goals and actual outcomes

🔭 The context: The VCM aims to channel funds into emission-reducing projects and provide cost-effective decarbonization options
• However, the focus on low-cost credits often leads to support for less effective projects, undermining the market's environmental objectives

🌍 Why it matters for the planet: While the VCM is intended to help reduce global emissions, the market's lack of transparency and emphasis on cheap credits often results in overstated climate benefits, limiting its true impact on climate change

⏭️ What's next: As scrutiny increases, some companies are moving away from traditional offsetting towards a contribution model, where they invest in climate projects without claiming to offset emissions, promoting greater transparency and impact

💬 One quote: "The market claims to deliver a certain climate impact, but this is more often than not exaggerated," highlighting the need for more accountability in the VCM

📈 One stat: Since 2004, over 250,000 retirement events have been recorded, with a total of 864 million credits retired, averaging around 3,200 credits per transaction

Click for more news covering the latest on carbon