If you build it, they will come

Over the last few weeks, in the midst of a slew of conferences, U.S. and international politics were on the center stage of the carbon market arena. The Navigating the North American Carbon World conference in San Diego and Carbon TradeEx conference in Washington, DC were awash with analysis of the Waxman-Markey draft U.S. climate legislation (see Pew's Digest of the American Clean Energy and Security Act of 2009).
While many details are certain to be changed in later iterations of the bill, there are several general lessons for the U.S. pre-compliance scene from the Waxman-Markey draft:
• Offsets will be allowed into a federal cap-and-trade scheme, and certain early actor voluntary offset purchases will receive compliance credit (though likely at a discounted rate).• Forestry activities (especially those involving reduced deforestation in developing countries) will be eligible offset project types, but it will be a couple of years before we know for certain which activities will be compliance offset-worthy. • The EPA will likely oversee the cap-and-trade program (giving a nod to the EPA Climate Leaders voluntary offset purchase guidance) • The California Climate Action Registry and Regional Greenhouse Gas Initiative are likely “best bets” for US pre-compliance buyers or project developers looking to sell to US pre-compliance buyers.
Across the pond, climate negotiators met in Bonn from March 29 through April 8 to continue negotiations on a Kyoto successsor treaty. The meeting was noteworthy in that it was the first meeting to host a workshop on agriculture (largely neglected in the Kyoto markets). Select developing countries (including Argentina, Mexico, and South Africa) also agreed to shoulder more of the global reduction burden than they have. However, countries are still dragging their feet on emissions reduction targets to set in the medium or long-term, causing many to feel that this meeting was largely "more of the same."
As policy makers wrestle at the drawing board with a mantra of ‘if we build it they will come,’ major voluntary market infrastructure providers continue to launch new partnerships and products aimed at reducing confusion and increasing transparency in the voluntary markets (as well as trying to gain an edge on the steep competition among standards, registries, and exchanges).
Since last month's launch of the Voluntary Carbon Standard's (VCS) Project Database, the three registries endorsed by VCS (APX, TZ1, and Caisse de Depots) have already issued millions of VCS-certified credits, known as VCUs. World Energy announced that its World Green Exchange has taken on a new feel, operating less exclusively as an auction house and more as a “virtual shopping mall” for carbon commodities. The American Carbon Registry announced that it has linked with TZ1 “to stimulate the market for trading U.S. pre-compliance and global voluntary market offsets.”
Coupled with renewed demand from pre-compliance buyers in early 2009, these infrastructural changes are signs of a reviving market. Read on for more voluntary market news in the last three weeks.
—The Editors
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