Supply and demand perspectives in the context of a transition to a low carbon economy
Carbon markets are a way to price greenhouse gas emissions. Both regulated and voluntary ones are now at the center-stage of discussions regarding the transition to a low-carbon economy, given the increase in net zero targets set by countries and companies.
Even though emission reduction should be the number one priority among every sector, science acknowledges that residual emissions will have to be neutralized through removals, especially in hard-to-abate industries. In this scenario, voluntary carbon markets, or offsetting mechanisms more specifically, are considered critical. Under those frameworks, companies can compensate or neutralize emissions that cannot be reduced by buying carbon credits.
Unlike regulated carbon markets, voluntary carbon markets do not have a specific regulation, nor do they have a central governance body. For this and other reasons, for a long time there has been a mistrust on the effectiveness of this strategy. Despite this, initiatives such as the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) are working to establish a common ground for all stakeholders involved in these transactions to make those markets more credible, transparent, robust and legitimate.
Considering its natural forestry vocation, Brazil could be a major player in this field, acting as a nature-based credit supplier. REDD+ projects could generate business of up to US$ 17 billion by 2030 in the country .
In its newest paper, Catavento analysed the most relevant international references on the subject, including what are the growth perspectives for global voluntary carbon markets, challenges to be overcome, demand and supply potentials, improvements proposed by the TSVCM, and finally, the opportunities for Brazil in this context.
Download the paper here.
 RONALDO SEROA DA MOTTA. Oportunidades e Barreiras no Financiamento de Soluções Baseadas na Natureza. 2020
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