Accelerating climate outcomes through the Voluntary Carbon Market
Why do we need a carbon market?
To make an impact on global climate goals, corporations must reduce emissions quickly and comprehensively. Decarbonization takes time, but we need meaningful change sooner rather than later. Carbon markets are essential to drive capital towards projects that reduce and remove emissions around the world. But to make a difference, they must be capable of reducing and removing billions of tons of carbon each year, which is many times what is traded in the markets today.
What are today’s carbon markets lacking?
Today, the credible scaling of the Voluntary Carbon Market (VCM) is hampered by the absence of necessary market infrastructure. Performance data is often inadequate or unavailable, the needs of buyers and sellers are poorly met, and there is insufficient understanding of comparability among projects. This has led to a market where both buyers and sellers face barriers to entry and the public lacks confidence in climate impact claims.
The Global Carbon Market Utility (GCMU) will solve these problems by applying what we know about infrastructure in other financial markets toward a new end: combatting climate change.
By working within the guardrails that keep our financial system safe and trustworthy, the GCMU can provide carbon-market participants with this same sense of safety and trust.
Our goal
Build a nimble market infrastructure for the VCM, so that it can achieve the scale required to meet our climate challenge – while satisfying ever-evolving financial and scientific regulations.
What will the GCMU do?
The GCMU will establish the infrastructure necessary for a trustworthy carbon market—including data transparency and management, contracts, audits, verification, and dispute resolution. This infrastructure will enable financial intermediaries, like banks and insurance companies, to enter the market, provide project financing, and house risk for end-buyers. Learn more.
The GCMU’s purpose is to:
Create an infrastructure to tap a larger pool of corporate money
Provide access to public ledgers allowing relevant regulators to review and take action as they deem necessary
Use existing contract forms, instead of new ones, to connect with the well-established financial audit process and industrial-scale project financing
Develop a template for a future mandatory market
GCMU Governing Council
To ensure that climate outcomes are not at odds with financial incentives, the GCMU Governing Council—a separate philanthropic entity—will oversee the GCMU operating body. The Governing Council will consist of leaders from civil society and environmental advocacy organizations, as well as leading subject matter experts, with the sole purpose of safeguarding the interests of the climate.
The Governing Council will oversee the GCMU’s operations. It also will be responsible for ensuring that transactions result in legitimate climate impact through two key functions:
The Governing Council will set annually updated rules to allow for the comparison of output by project type.
The Governing Council will commission an annual report that will assess the impact on the global carbon budget of the tons offset and processed through the GCMU.
Background
The Global Carbon Market Utility and the Governing Council were launched at COP27 with philanthropic support from Three Cairns Group and Bloomberg Philanthropies and have worked since then to define operations, build consensus around their approach, and recruit partners and organizational staff.
In Conversation at COP27
Latest News
December 2023
The Global Carbon Market Utility engages EY to Build Infrastructure to Scale the Voluntary Carbon Market. Read more.