The Voluntary Carbon Market (VCM) provides a mechanism to channel private finance to underfunded climate solutions. Amid the debate over the VCM’s role in corporate decarbonization, we examined market trends in the Asia Pacific (APAC) region.
Despite a dip in recent years, the volume of carbon credits issued in the region has increased significantly since 2014. India, China, Australia and Indonesia lead the way, while sustainable energy, followed at a distance by nature restoration and REDD.plus,1 have been the most important project types.
Among publicly traded companies, companies based in Japan, Australia and China have led the purchase and retirement of carbon credits by volume since 2014, with renewable energy credits accounting for almost half of these retirements. Company information shows that some companies have applied for credits to make carbon neutrality claims – a practice that has drawn increasing attention to concerns about environmental integrity.2
Within the APAC region, several efforts are underway to clarify the role of carbon credits in enabling climate action. In line with global efforts, APAC authorities are developing guidelines for the use of carbon credits for environmental claims and the required disclosures for these claims.3 Ongoing pilot projects on the use of transition credits to bridge the financing gap for the early retirement of coal-fired power stations,4 as well as policies that allow companies to meet part of their carbon market5 commitments through carbon credits,6 can further facilitate the development of the VCM.