Climate Markets

The emerging carbon market presents one of the greatest opportunities in the last fifty years to reverse the destruction of the world’s remaining tropical forests by matching buyers and sellers of carbon credits. When financial mechanisms are designed properly, the money received by forested nations for carbon offsets can reward community stewards for protecting forests in the face of other competing pressures to clear them.

CI is working to promote the development of large-scale markets for forest carbon through our policy work by supporting the development of robust standards; implementing successful field projects; creating financing mechanisms; and engaging the corporate sector to invest in forest carbon.

The carbon market

The benefit of carbon offsetting is that it can facilitate deeper emissions cuts for a fixed cost that yields economic gains for nations in need. A reduction of greenhouse gas emissions anywhere in the world is equally valuable no matter where it is produced. Therefore buyers may come from every corner of the world, and benefits can be seen by nations most in need of financing.

Through our integrated and cross-cutting program, CI aims to develop robust market mechanisms within emerging climate policy frameworks to mobilize private capital and action. To match this demand for offsets, we work to ensure that there is a robust supply of high-quality carbon credits from developing countries with threatened tropical forests.

Currently, most forest carbon investment takes place through the voluntary market, in which corporations, other institutions, or individuals pay to "offset" all or part of their greenhouse gas emissions to meet some voluntary goal for reducing their carbon footprint. The voluntary market for forest carbon is still quite small – less than $100 million per year of investment – but it represents an excellent opportunity for demonstrating the potential of well-designed ecosystem conservation and restoration activities for generating high-quality emissions reductions. In addition, voluntary activities build experience and create new standards and other frameworks that can be invaluable for informing the development of emerging compliance markets.

Developing carbon standards

To create a robust market for forest carbon offsets, there are five essential elements:

1. It is essential for buyers to have confidence that the emissions reductions they are purchasing are real.
2. The offsets should be additional (meaning they would not have occurred in the absence of the carbon project).
3. They should be measurable.
4. The offsets should be verifiable.
5. Lastly, they should be permanent.

CI has played a leading role in the development of the two leading global standards for forest carbon projects – the Verified Carbon Standard (VCS) and Climate Community & Biodiversity (CCB) Standards. VCS and CCB Standards are complementary and intended to work together. Their validations and verifications provide investors and policymakers with the assurance that the project will reduce global greenhouse gas emissions, conserve threatened biodiversity and create sustainable livelihoods. These two standards have emerged as the most desirable and widely used forest carbon standards in the marketplace. All CI projects are being developed to achieve certification under these two standards.