How do regulated and voluntary carbon-offset schemes compare?

The purchase of Verified Emission Reductions through the voluntary carbon market has become a mainstream practice across business and individuals who aim to offset their greenhouse gas emissions. This voluntary market relies on offset projects which may or may not follow the standards of the Kyoto Protocol’s Clean Development Mechanism. In this article, we review the international policy context in which the voluntary market has developed, its institutional structure, including general procedural rules, existing registries, actors involved, volume of emission reductions transacted, and its methodological and certification standards. We then conduct an analysis of project typologies and their potential sustainable development benefits. With all this information, we compare the voluntary market with the Clean Development Mechanism, we trace their differences, and we identify what the voluntary carbon market is good for and where its weaknesses lie.

Estrada, M., E. Corbera, and K. Brown