Fortifying the Foundations: State of Voluntary Carbon Markets 2009. Presentation

8/14/2019 Fortifying the Foundations: State of Voluntary Carbon Markets 2009. Presentation

http://slidepdf.com/reader/full/fortifying-the-foundations-state-of-voluntary-carbon-markets-2009-presentation 1/27

1



2

• Overall the market doubled between 2007 and 2008

• “If you build it they will come”: expanding infrastructure,

standards maturing & increased attention in pre-compliance

context

• Headlines down (the good & the ugly) but credibility still a

focus

• CSR and PR remain core motivations, but intermediaries are

scaling up and the pre-compliance market is gaining

• Increasingly savvy buyers

Key findings



3

• Market-wide, comprehensive survey of the voluntary carbonmarkets

• Survey itself purely focused on the over-the-counter (OTC)market

• Survey covered all offset suppliers including developers,aggregators/wholesalers, and retailers. We estimate that

more than 70% of identified suppliers participated

• Other than the direct respondents, further data was obtainedfrom brokers, registries, and exchanges.

This year, a record 169 respondents from 28countries responded to our survey



4

2009 Respondents: five countries host 70% of the organisations

61

2019

108

5 6 4 4 3 3 3 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 10

10

20

30

40

50

60

70

U S A

A u s t r a l i a U K

C a n a d a

N e t h e r l a n d s

G e r m a n y

S w i t z e r l a n d

B r a z i l

F r a n c e

N

e w Z e a l a n d

S i n g a p o r e

S p a i n

C h i n a

I n d i a

B e l g i u m

M e x i c o

U r u g u a y

P e r u

D e n m a r k

A u s t r i a

C o l o m b i a

C z e c h R e p

G u e r n s e y

J a p a n

S . K o r e a

P o r t u g a l

S o u t h A f r i c a

T u r k e y

S w e d e n

M

a d a g a s c a r

C o u n t

Source: “State of the Voluntary Carbon Markets 2009”, Ecosystem Marketplace and New Carbon Finance



5

Strong volume growth in the CCX contributes to a

near doubling of voluntary carbon markets


Voluntary Markets Volume

42

10 5 8 915

4354

2 1

10

23

69

0.1

0.2

0

20

40

60

80

100

120

140

Pre-2002 2002 2003 2004 2005 2006 2007 2008

M t C O 2 e Other

Exchanges

CCX

OTC

123Mt

66Mt

25Mt

11Mt11Mt5Mt10Mt

42Mt

87%

164%



6

However, the OTC market still makes up 56% of

the market’s value due to its price premium


Voluntary Markets Value

171

43 23 35 3961

262

397

3 3

38

72

307

1

1

0

100

200

300

400

500

600

700

800

pre-2002 2002 2003 2004 2005 2006 2007 2008

M t C O 2 e Other

Exchanges

CCX

OTC

$705M

$335M

$99M

$42M$37M$23M$43M

$171M

111%

238%

Average price:OTC = $7.34/tCCX = $4.43/t



7

The voluntary market has grown faster than the

compliance market, but is still marginal


MarketsVolume (MtCO2e) Value (US$ million)

2007 2008 2007 2008

Voluntary OTC 43.1 54.2 262.9 396.7

CCX 22.9 69.2 72.4 306.7

Other exchanges 0 0.2 0 1.3

Total Voluntary Markets 66.0 (2.2%) 123.4 (2.9%) 335.3 (0.5%) 704.8 (0.6%)

EU ETS 2,061.0 2,982.0 50,097.0 94,971.7

Primary CDM 551.0 400.3 7,426.0 6,118.2

Secondary CDM 240.0 622.4 5,451.0 15,584.5

Joint Implementation 41.0 8.0 499.0 2,339.8

Kyoto [AAU] 0.0 16.0 0.0 177.1

New South Wales 25.0 30.6 224.0 151.9

RGGI - 27.4 - 108.9

Alberta’s SGER(a) 1.5 3.3 13.7 31.3

Total Regulated Markets 2,919.5 4,090.0 63,710.7 119,483.4

Total Global Markets 2,985.5 4,213.4 64,046.0 120,189.0



42

10

58 9

15

43

54

74 3 4

7 5

12 12

0

10

20

30

40

50

60

Pre-2002 2002 2003 2004 2005 2006 2007 2008

M t C O 2 e

Sold

Retired

8

The main goal is credit retirement though, which

has stayed level since 2007


Historic Transaction Values and Retirement

Churn rate= 4.4 (or2.9)



9

Renewable energy was the major winner capturing

over half the volume, landfill gas second


Transaction Volume by Project Type

4% 5%7%

27%

4% 2%

18%

9%

1% 0.3%

18%

5%3%

17%

1%

51%

0.3% 0.6%

4%1%

5%2%

11%

4%

0

5

10

15

20

25

30

A g M e t h a n e

L a n d f i l l

C o a l M i n e

R e n e w a b l e

E n e r g y

R E C s

I n d u s t r i a l G a s

E n e r g y

E f f i c i e n c y

F u e l S w i t c h i n g

G e o l o g i c a l S e q .

F u g i t i v e

E m i s s i o n s

F o r e s t r y a n d

L a n d U s e

M i x e d / N o t

S p e c i f i e d

M t C O 2 e

2007

2008

data labels = % of annual market share



10Source: “State of the Voluntary Carbon Markets 2009”, Ecosystem Marketplace and New Carbon Finance

Transaction Volume by Project Type

Ag Soil 1%

Ind. Gas 1%

ForestManagement 1%

Fuel Switching1%

Aff/RefPlantation 1%

Coal Mine1%

AvoidedDeforest 1%

FugitiveEmissions

2%

Other Types2%

Not Specified2%

32%

17%15%

7%

5%

4%

3%

3%

13%

RE: Hydro

Landfill

RE: Wind

Aff/Ref Conservation

Geological Seq

Energy efficiency

RE: Biomass

Ag Methane

Other

Renewable energy and methane dominant project types



11

Asia and the US dominate supply


Transaction Volume by Location and Project Type

5% 4%

8%

.0004%

23%

28%

7% 4% 7% 4%

39%

45%

.2%

15%

2% 1%

5%2%

0.4% 1%0

5

10

15

20

25

2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008

EU Non-EU (inclRussia)

Canada US AU/NZ Latin America Asia Middle East(incl Turkey)

Africa (exclEgypt)

Mixed/NotSpecified

M t C O 2 e

Mixed/ Not Specified

Fugitive Emissions

Geological Seq.

Fuel Switching

Energy efficiency

Industrial Gas

Methane

Forestry/Land Use

Renewable Energy

data labels = % of annual volume




Project type also has a clear price influenceAverage Prices and Price Ranges by Project Type

7.05.7

4.6

10.08.2

6.1 5.9

2.6

9.6

12.6

22.0

5.2

16.818.0

6.47.5 7.7

6.3

3.4

6.0 6.27.7

-

5

10

15

20

25

30

35

40

45

50

E n e r g y e f f i c i e n c y ( 3 0 )

F u e l S w i t c h i n g ( 9 )

I n d u s t r i a l G a s ( 2 )

A g M e t h a n e ( 2 2 )

L a n d f i l l ( 4 0 )

C o a l M i n e ( 4 )

F u g i t i v e E m i s s i o n s ( 2 )

G e o l o g i c a l S e q ( 1 )

R E C s ( 2 )

R E : W i n d ( 6 4 )

R E : S o l a r ( 6 )

R E : H y d r o ( 3 2 )

R E : B i o m a s s ( 2 9 )

R E : O t h e r ( 1 )

A f f / R e f P l a n t a t i o n ( 3 2 )

A f f / R e f C o n s e r v a t i o n

( 1 7 )

F o r e s t M a n a g e m e n t ( 4 )

A v o i d e d D e f o r e s t a t i o n

( 1 0 ) A

g S o i l ( 6 )

O t h e r L a n d b a s e d ( 1 )

O t h e r ( 1 1 )

N o t S p e c i f i e d ( 5 )

U S $ / t C O 2 e

Volume-weighted

Average

MaximumTransaction

Price

MinimumTransaction

Price



13

Similar to last year, 2007 vintage and beyond are

by far the most popular – 86% of the transactions


Vintage by Credit Transaction Volume

1%2% 2% 3%

8%

19%

30%

5%2% 1% 1% 2%

11%

14%

0.1%0.6%

1% 2%

4%

6%

31%

12%

6% 5% 5%4%

13%

10%

0

2

4

6

8

10

12

14

16

18

Pre- 2002 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Post-2012 N/A,Unknown

M t C O 2 e

2007

2008

data labels = % of market share



14

Average prices increase along the value chain

although retail prices have declined from 2007


Average Prices by Supplier Business Activity

5.1 5.4 6.08.9

-

5

10

15

20

25

30

3540

45

50

Developer Wholesaler Broker Retailer

U S $ / t C O 2 e

AverageTransaction Price

MaximumTransaction Price

MinimumTransaction Price

48%11.1%5.8%



15

Larger volume transactions were the largest share

with payment-on-delivery most common


Transaction Volume by Transaction Size

46%

24%

17%

9%

3%1%

0.2%

Very large

Medium

Large

Small

Micro

N/A, I don'tknow

Mixed

51%

22%

18%

5%

3%

1%Payment-on-delivery

(POD), unitcontingentPayment-on-delivery(POD), f irm

deliverySpottransaction

Pre-pay(PP), unitcontingent

Other

Transaction Volume by Type of Contract

http://f/StateOfTheVoluntaryCarbonMarkets_2009%20FINAL_MS.doc
























16

Over 96% of transacted credits were third party

verified


48%

12%

10%

9%

4%

3%3%

3% 9%Voluntary CarbonStandard (VCS)

Gold Standard (GS)

Climate ActionReserve (CAR)

American CarbonRegistry (ACR)

Other

Chicago ClimateExchange (CCX)

Greenhouse Friendly

Climate Community &Biodiversity (CCB)

Other

Internalcreated

2%

VER+2%

CDM/JI2%

ISO-14064

1%

SocialCarbon

1%



17

Four Dominant Standards in 2008


Transaction Volume by Standard

29%

9% 7% 6%

16%9%

3% 2%3%

2%1% 3%

12%

0.3%

48%

12%11% 9%

3% 3%2% 2% 3% 1% 1%

2%0.2%

4%

0.2%0

5

10

15

20

25

30

V C S

G o

l d

S t a n

d a r d

C A R

A C R

C C X

G r e e n

h o u s e

F r i e n

d l y

C D M / J I

V E R +

C C B

S o c

i a l

C a r b o n

I S O - 1

4 0 6 4

I n t e r n a

l l y

c r e a

t e d

G r e e n - e

C l i m a

t e

V O S

O t h e r

N o n e

/ I

d o n

' t k n o w

M t C O 2 e

2007

2008




18

Registries Increasingly Integrated


Transaction Volume by Registry

5%

2%

13%

4%

18%

12%

2%

0.1%

25%

14%

9%

21%

10%

9%

5%

3% 3%

8%

2%1%

13%

8%

0

1

2

3

4

A m e r i c a n C a r b o n

R e g i s t r y ( A C R )

C l i m a t e A c t i o n

R e s e r v e ( C A R )

B l u e R e g i s t r y

G

o l d S t a n d a r d ( G S )

C

l e a n D e v e l o p m e n t

M

e c h a n i s m ( C D M )

C h i c a g o C l i m a t e

E x c h a n g e ( C C X )

T Z 1

D O E 1 6 0 5 ( b )

N e w S o u t h W a l e s

G G A S

G r e e n h o u s e

F r i e n d l y

B

a n k o f N Y ( B o N Y )

I n t e r n a l R e g i s t r y

O t h e r

M t C O 2 e

2007

2008





Prices (somewhat) consolidate around standards

9.1

3.8

18.4

8.9

4.0

21.3

9.0

14.4

12.3

8.85.6

7.45.5

5.8

11.4

8.3

16.8

10.8

-

5

10

15

20

25

30

35

40

45

50

I n t e r n a l l y c r e a t e d

( 2 5 )

A C R ( 1 1 )

C a r b o n F i x ( 3 )

C A R ( 2 2 )

C C X ( 2 6 )

C D M / J I ( 2 1 )

C C B ( 1 0 )

G o l d S t a n d a r d

( 3 2 )

G r e e n - e ( 3 )

I S O - 1 4 0 6 4 ( 1 5 )

P l a n V i v o ( 1 1 )

S o c i a l C a r b o n ( 6 )

V C S ( 8 9 )

V E R + ( 1 1 )

G r e e n h o u s e

F r i e n d l y ( 1 8 )

O t h e r ( 1 2 )

N o n e ( 8 )

I d o n ' t k n o w ( 5 )

U S $ / t C O 2 e

Volume-

weightedAverage

Maximum

TransactionPrice

Minimum

Transaction

Price

Average Prices and Price Ranges by Standard

AverageOTC =$7.34/t



20

EU and the US creating 92% of demand


53%39%

6%2% 0%

EU countries

US

Australia/ New

Zealand

Canada

Other



21

Type of Buyer


35%

29%

29%

2%

1%1% 1%1% Business for-profit (for resale)

Business for-profit (for retirement,without pre-compliance motive)

Not Applicable/ I don't know

Individuals (for retirement)

NGOs/ non-profit organisation (forretirement)

Governments (for retirement)

Other

Business for-profit (for pre-compliance)




However, sellers still thought that CSR and PR were

the main motivation for their buyersCustomer Motivation according to Sellers

2.2

2.7

4.4

4

2.52.52.4

4.3 4.4

2.72.8

2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Investment/ resale

Anticipation ofregulation

Corp. Resp. PR / branding Businessmodel

Easier thandirect

reductions

Other

I m p o r t a n c e R a n k i n g

2007

2008



23

Voluntary carbon markets expected to reach 257

MtCO2e in 2012 and 476 MtCO2e in 2020


Projected Market Growth for the Voluntary Carbon Markets, according to Participants

0

50

100

150

200

250

300

350

400

450

500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

S a l e s ( M t C O 2 e )

Historic Growth

Projected Growth (by2008 participants)

Projected Growth (by2007 participants)

2008 projection



24

VCS, CDM, GS, CAR and CCB are poised to win

the battle for consolidation


Future Standard Usage, According to Participants

0

20

40

60

80

100

120

V C S

C D M

G o l d S t a n d a r d

C A R

C C B

V E R +

C C X

I S O - 1 4 0 6 4

O t h e r

R G G I

I n t e r n a l l y c r e a t e d

C a r b o n F i x J

I

P l a n V i v o

A C R

S o c i a l C a r b o n

E P A C l i m a t e L e a d e r s

G r e e n - e C l i m a t e

G r e e n h o u s e F r i e n d l y

I d o n ' t k n o w y e t

A l b e r t a

T U V N O R D

G E A E S G G H S

N u m b e r o f c o m p a

n i e s

data labels= % of respondents projecting to use the standard

52%

34%32%

28% 27%

12% 11% 11% 11%8% 8% 7% 6% 5% 5%

5% 4% 3% 3% 3% 3% 2% 1%




Future Registry Usage, According to Participants

0

5

10

15

20

25

30

35

40

45

C A R

G

o l d S t a n d a r d R e g i s t r y

A P X

T Z 1

C D M

C C X

I d o n ' t k n o w y e t

C C B D a t a b a s e

O t h e r

I n t e r n a l r e g i s t r y

B l u e R e g i s t r y

A C R

B a n k o f N e w Y o r k

N S W G

H G

R G G I

C a i s s e d e s D e p o t s

G H G C l e a n P r o j e c t s

A u s t r a l i a C l i m a t e

E x c h a n g e

P l a n V i v o P r o j e c t s R e g i s t a r

G

l o b e C a r b o n R e g i s t r y

T U V N O R D R e g i s t r y

T r i o

d o s C l i m a t e C l e a r i n g

H o u s e

N o t A p p l i c a b l e

R e g i

N o n e

A s i a C a r b o n R e g i s t r y

N u m b e r o f

c o m p a n i e s

data labels = % of respondents projecting to use the registry23% 23%

21%21%

19%

11%

10%9% 9%

8%7%

6% 5% 5% 5%4% 4%

3% 3%2% 2% 2% 2% 2% 2%

1%



26

• The market is maturing rapidly with standard consolidation,

increased transparency and an expanding infrastructure

• As the increasing demand from Europe illustrates, voluntary

offsetting is very important for CSR/PR purposes and fills aunique niche alongside compliance markets

• It is likely exist (and even over the next several years grow) in

the face of U.S. Regulation

• The voluntary carbon markets remain a source of innovation

Main takeaways



27

Again thanks to our respondents and sponsors

Thomas Marcello Katherine Hamilton

New Carbon Finance Ecosystem Marketplace

Tom.[email protected] [email protected]

+1 646 214 6168 +1 202 298 3007

mailto:[email protected]




Fortifying the Foundations: State of Voluntary Carbon Markets 2009. Presentation

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