Voluntary carbon markets (VCMs) are those in which carbon credits are voluntarily produced and traded for carbon offsetting purposes. Voluntary carbon markets (VCMs) can help developed countries achieve climate goals by reducing emissions and by funding nature-based solutions and mitigation activities. However, VCMs are unregulated and criticised for facilitating the transaction of low-quality carbon credits and enabling fraudulent claims. Standard-setting bodies like the Integrity Council for the Voluntary Carbon Market (ICVCM) are working to regulate these markets, and governments are considering how to apply these standards to enhance market integrity and shape how organisations engage with VCMs.
In Wales, VCM-driven finance could support the goals of the Well-being of Future Generations (Wales) Act 2015 and the transition to net-zero emissions. However, risks such as land rights issues in nature-based offset projects require strong environmental, social and governance safeguards.
The Welsh Government has asked the Wales Centre for Public Policy (WCPP) to synthesise evidence on how other countries and regions have developed and implemented policies, schemes and regulations on VCMs, and how lessons from these countries and regions might be applied in Wales. WCPP has commissioned the Grantham Institute on Climate Change and the Environment to help deliver this project.