The market for voluntary offsetting is growing, but needs more transparency

Just how crisis-proof is the market for offsets in Germany? What are the pros and cons of the most-used standards? These were the questions that adelphi and sustainable tackled in their latest study. An additional guidebook provides consumers with tips on how to do offsetting the right way.

More and more consumers and businesses are taking notice of how the greenhouse gas emissions that they cause are being offset elsewhere. For many tourists, it has become an everyday thing to pay for CO2 offsets on flights, an option already today offered to them by travel agencies and airlines at the booking stage. In parallel to this growing demand, the number of providers of compensation services has also been growing for several years, as has a range of carbon neutral products, as a result of which the market itself has become somewhat complex.

What does the market look like today, and just how sustainable is it? Are market players facing the same challenges as those in the compliance market? And how great is the risk of fluctuating product quality in a market with no central recognition procedures or uniform standards? These were the questions analysed by adelphi and sustainable in a study for the German Emissions Trading Authority (DEHSt), a part of the German Federal Environment Agency.

Dynamic developments are continuing apace, but the market needs more transparency

adelphi and sustainable's market analysis shows that the market for voluntary offsetting of greenhouse gases has proven crisis-proof. Whilst the compliance market faces difficult market conditions, the market for voluntary offsets has developed and diversified dynamically in recent years. As an additional climate mitigation instrument, voluntary offsetting of greenhouse gases can make a real contribution to the avoidance of emissions, without resulting in a corresponding reduction in quality as may be observed in the compliance market. Improvements can only continue to be made via an overview of what is on offer in terms of voluntary offsets and transparency with respect to the costs likely to be incurred.

This latest study links to a market analysis carried out by sustainable and adelphi in 2010. This updated analysis brings together current insights into the German market for voluntary offsets for the years 2012 to 2013. In addition, it sheds a light on aspects of the German market which prove unique in the international context, also presenting the latest insights into differences in quality between the voluntary and regular markets. This was achieved by asking both suppliers and consumers about their market behaviours, preferences, transaction volumes, prices and the various characteristics of the certificates currently on the market.

New guidebook provides transparency and information on quality standards

In order to underline transparency in the market, adelphi and sustainable have developed a practical guidebook, based upon findings form the latest study, with the aim of helping consumers to orientate themselves in the market for voluntary carbon offsetting. The authors take the guide as an opportunity to explain how the voluntary compensation of emissions works, also summarising what consumers should look for when buying a compensation certificate. They summarise the most important quality requirements and evaluate the various advantages and disadvantages of common quality standards.

The study – title translated: Updated Analysis of the German Market for Voluntary Greenhouse Gas Offsetting – can be downloaded from the German Federal Environment Agency's website. For a brief English summary, see pages 22-30. The guidebook will also soon appear on adelphi's website.