Despite lingering skepticism among some groups about the validity of a voluntary carbon offset market, 2007 saw a record number of companies zero out their carbon emissions (or go “carbon neutral”), offer carbon neutral products, and create new specialized services in the offset market, especially in the United States and Europe. ICF International (NASDAQ:ICFI) expects the trend will continue to strengthen over the next five years, as companies realize the financial and social benefits of corporate responsibility and stewardship.
One factor that could slow the bullish trend is the lack of good quality offset projects. The soaring demand for them has resulted in highly fragmented product supply and pricing, with complex, unregulated, and non-transparent markets creating additional risks and uncertainties. Another possible hindrance is expanding regulatory actions that dampen voluntary demand.
These and other findings are reported in ICF’s newly released 2008 Voluntary Carbon Offsets Market Outlook, an in-depth analysis of the opportunities, players, trends, and barriers that characterize the voluntary carbon offset market up to 2012.
“The voluntary carbon market is front page news these days, attracting attention from not only the media, but legislators, multinational companies, and individuals,” said Craig Ebert, managing director of ICF’s climate and environmental strategy. “Our analysis shows that demand in the carbon offsets market will grow from around 20 million tons of CO2 in 2006 to 220 million tons in 2012. Under this scenario, high-income countries will drive demand, fueled by increased awareness of climate change issues, and carbon neutrality will be considered mainstream in the United States and Europe in the financial, media and retail sectors by 2012.”
The report also highlights that in an effort to develop supply and bring innovative solutions to the offsets market, many new practices that were applied in 2007 have resulted in an increased diversification of carbon offset prices as well as increased market segmentation.
"In our opinion, to become successful, the voluntary market will develop around a very limited set of standards, designed and managed through a transparent process,” said Alexandre Marty, manager of ICF’s climate change activities in London. “The organizations launching the standard should be experienced, credible, and free from conflict of interest.”
“Some standards developed for niche markets will likely survive, but we believe that the Voluntary Carbon Standard Version 2 and the Gold Standard will be the most commonly used,” Marty added. “We also expect that credits from Clean Development Mechanism projects will continue to be used for voluntary offsetting.”
About ICF International
ICF International (Nasdaq:ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,000 employees serve these clients worldwide. ICF’s Web site is http://www.icfi.com.