The Voluntary Carbon Market

Report analyses potential for compensation of GHG emissions in Germany

(Photo: Rovinari Power Plant by byrev / pixabay / CC0 1.0)

September 2018 – Voluntary carbon offsets can play a role in promoting private sector efforts to protect the climate. This report analyses recent developments on the voluntary carbon market in Germany and assesses the key traits needed by and the potential for individuals and companies to participate in the offset market. It elaborates conclusions and recommendations with a focus on domestic offset projects and the kinds of regulatory approaches that can help leverage existing potential.

The analysis finds that the offset market in Germany is growing, but still only plays a limited role in terms of the emission volume covered. Companies account for the lion’s share of the voluntary carbon market. An analysis of the sustainability strategies of the 30 companies listed in Germany’s major stock market index, DAX 30, reveals a plethora of approaches such as the adoption of climate neutrality targets and participation in the Science Based Target Initiative. Ten of these companies offset voluntarily – the same number as five years ago. But among them, some have significantly stepped up how much they offset, increasing their aggregated offset volume to above one million tCO₂e annually. In terms of volumes, individual buyers play a marginal role in the offset market. Improved availability of information is one option that can be used to increase participation. Efforts could focus on offsetting flight emissions, by far the most relevant option where individual buyers are concerned.

Building on their observations, the authors set out recommendations on how governments could help leverage the significant potential of the voluntary carbon market, for instance by acting as a role model in committing to comprehensive, long-term strategic engagement on the offset market and promoting communication on voluntary compensation. In terms of regulation, the international climate negotiations should provide a way to link voluntary offsets with emissions accounting – thus alleviating growing concerns over double counting. At the domestic level, the authors recommend laying out what can be considered good practice for domestic offset projects and the approach it takes in addressing double counting at the national level.

Note: This publication is available in German only.

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