How is government regulation shaping the Voluntary Carbon Market?
Fionan O'Muircheartaigh
Director of Policy & Markets
Isobel Sizer
Policy Team
9 min
The voluntary carbon market (VCM) has been developed largely outside of government activity. As a result, the market has established its own operating rules, including through the use of independent standards bodies, third-party verifiers and, more recently, carbon ratings agencies.
This is beginning to change. Governments are turning their attention to the VCM and designing bespoke regulations to shape the market.
A key catalyst for this activity is the Paris Agreement, which is prompting governments to develop decarbonisation strategies that leverage their carbon assets.
In spite of the significant volume of new regulations, there is little research on how governments are regulating the VCM and how this is impacting the market. This report - the first in a series - aims to address this. We look at dozens of interventions that are supporting and regulating the market and analyse how they are likely to shape the market in the coming years.
Key Takeaways:
1. Governments are increasingly regulating the Voluntary Carbon Market and will shape the future development of the market.
2. The Paris Agreement is a catalyst of government intervention in the market, driven by government efforts to meet climate targets.
3. Government attention is a sign that the VCM is maturing. Proportionate regulation can help recognise the value of carbon assets and build confidence in the market.
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