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1 Sharing th Stag Stat of th Voluntary Carbon Markts 2014 Donor: Sponsors:

2 About Forst Trnds Ecosystm Marktplac Ecosystm Marktplac, an initiativ of th non-profit organization Forst Trnds, is a lading sourc of information on nvironmntal markts and paymnts for cosystm srvics. Our publicly availabl information sourcs includ annual rports, quantitativ markt tracking, wkly articls, daily nws, and nws brifs dsignd for diffrnt paymnts for cosystm srvics stakholdrs. W bliv that by providing solid and trustworthy information on prics, rgulation, scinc, and othr markt-rlvant issus, w can hlp paymnts for cosystm srvics and incntivs for rducing pollution bcom a fundamntal part of our conomic and nvironmntal systms, hlping mak th priclss valuabl. Ecosystm Marktplac is financially supportd by organizations such as th Skoll Foundation, th Swiss Agncy for Dvlopmnt and Coopration, th Intrnational Climat Initiativ, th Gordon and Btty Moor Foundation, PROFOR, as wll as sponsors and supportrs of this rport. Forst Trnds is a Washington, DC-basd intrnational non-profit organization whos mission is to maintain, rstor, and nhanc forsts and connctd natural cosystms, which provid lif-sustaining procsss, by promoting incntivs stmming from a broad rang of cosystm srvics and products. Spcifically, Forst Trnds sks to catalyz th dvlopmnt of intgratd carbon, watr, and biodivrsity incntivs that dlivr ral consrvation outcoms and bnfits to local communitis and othr stwards of our natural rsourcs. Forst Trnds analyzs stratgic markt and policy issus, catalyzs connctions btwn producrs, communitis and invstors, and dvlops nw financial tools to hlp markts work for consrvation and popl. Forst Trnds Ecosystm Marktplac th Strt, NW 4th floor Washington, DC [email protected]

3 Sharing th Stag Stat of th Voluntary Carbon Markts 2014 A Rport by Forst Trnds Ecosystm Marktplac Molly Ptrs-Stanly and Gloria Gonzalz Contributors: Alli Goldstin and Klly Hamrick May 2014 A F O R E S T T R E N D S I N I T I A T I V E

4 Copyright and Disclaimr: Ecosystm Marktplac is an initiativ of Forst Trnds. This documnt was basd upon information supplid by participants in a markt survy. Forst Trnds Ecosystm Marktplac dos not rprsnt or warrant th accuracy, suitability, or contnt of th survy rsponss or th rsults of that survy as st out hrin. It is th sol rsponsibility and obligation of th radr of this rport to satisfy himslf/hrslf as to th accuracy, suitability, and contnt of th information containd hrin. Forst Trnds Ecosystm Marktplac (including its rspctiv affiliats, officrs, dirctors, partnrs, and mploys) maks no warrantis and shall hav no liability to th radr for any inaccuracy, rprsntation, or misrprsntation st out hrin. Th radr furthr agrs to hold Forst Trnds Ecosystm Marktplac harmlss from and against any claims, loss, or damag in connction with or arising out of any commrcial dcisions mad on th basis of th information containd hrin. Th radr of this rport is strongly advisd not to us th contnt of this rport in isolation, but to tak th information containd hrin togthr with othr markt information and to formulat his/hr own viws, intrprtations, and opinions thron. Th radr is strongly advisd to sk appropriat lgal and profssional advic bfor ntring into commrcial transactions. Acknowldgmnts: This rport is a compilation of th insights of a wid rang of individuals across svral continnts. It would not b possibl without th hundrds of individuals who shard critical information about thir organizations. This rport is publicly availabl thanks to th gnrous sponsorship of ClimatCar, EcoAct and Santiago Climat Exchang, as wll as ongoing support from th World Bank Program on Forsts (PROFOR). Th production of this rport has also rquird insights, tim, and support from dozns of popl. Thy includ Duncan Abl, David Antonioli, Obadiah Bartholomy, Olli Blton, Kathy Bnini, Simon Bnntt, Jff Brnick, Giulio Brruti, Kith Black, Louis Blumbrg, Drik Brokhoff, Lucio Brotto, Martina Burri, Ed Canady, Aldo Crda, Trish Chartrand, Michal Dantoni, Kristl Dorion, Brnt Dorsy, Joanna Durbin, Kathln Edi, Gabril Eickhoff, Martin Ewald, Dirk Forristr, Gary Gro, Andrw Goldbrg, Robrto Lon Gomz, Mary Grady, Jason Gray, Sophy Grnhalg, Myls Guy, Edward Hanrahan, Laurn Haubr, Zhuli Hss, Joann Hochhisr, Andrs Huby, Toby Janson-Smith, Josh Kmpinski, Dick Kmpka, Brian KillKlly, Mik Korchinsky, Pir Kuhn, Lars Kval, D and Richard Lawrnc, Sung-hyun L, Alxis Lroy, Sarah Lugrs, Daisy Lilly, Camilla Lops, Sarah Mack, Aya Marabini, Grald Maradan, Grattan MacGiffin, Stphn McComb, Brian McFarland, Pitr van Midwoud, Blinda Morris, Danil Npstad, John Nickrson, John O Connor, John O Nils, Yvs C. Paiz, Jason Patrick, Tanya Ptrsn, Jim Procanik, Matt Ramlow, Dbbi Rd, Julian Richardson, Adrian Rimmr, Alssandro Riva, Andra Rumiz, Rajindr Sahota, Dipjay Sanchania, Stv Schwartzman, Jonathan Shoply, Drk Six, Matt Spannagl, Chris Stphnson, Jff Swartz, Naomi Swickard, Carlo Figà Talamanca, Andr Tmplman, William Thisn, Kvin Townsnd, David Tulauskas, Garth Turnr, Jnnifr Twddll, Mariama Vndramini, Chandlr van Voorhis, Jun Watanab and othr mmbrs of Japan s Ovrsas Environmntal Coopration Cntr (OECC), San Wavr, Jnnifr Wiss, Vicky Wst, Troy Wisman, Garth Wishart, Zubair Zakir, and Wnji Zhuang. A spcial thank you to Michal Jnkins for his guidanc and to th staff at Forst Trnds Ecosystm Marktplac. Covr, layout, and graphics by Esztr Szöcs of Visilio Dsign ( dsign

5 Stat of th Voluntary Carbon Markts 2014 v Exprts invok th trm anthropocn to informally dscrib th currnt ra in which human activitis, and spcially anthropognic climat chang, ar making an irrvrsibl cological mark. In rspons, countlss companis, countris, and citizn consumrs hoping to drail th most dangrous climat scnarios voluntarily took dirct and indirct climat action in 2013 including buying carbon offsts worth $379 1 million to lock 76 million mtric tonns ( ) of grnhous gass (GHGs) out of th atmosphr. Last yar, voluntary carbon offst buyrs thrw thir collctiv wight bhind climat-ld dvlopmnt. With many of ths buyrs drivn to altruistically combat climat chang through thir purchass, 2013 saw a rcord volum of offsts transactd from projcts that dlivr climat and community-facing outcoms ( cobnfits ) in dvloping countris. Buyrs prioritizd support to projcts that d-car boniz nrgy, plant or protct forsts, or sav livs by Box 1: KEY REPORT FINDINGS Across all yars of markt activity trackd in this rport sris, voluntary buyrs hav dirctly fundd 844 in missions rductions worth $4 billion, at an avrag historical pric of $5.9/tCO 2. In 2013, offst supplirs transactd 76 of carbon offsts down from in 2012 as structural changs in California s carbon markt impactd millions of prviously voluntary tonns. Markt valu fll to $379 million, tracking alongsid lowr avrag prics ($4.9/tCO 2 markt-wid). Th volum of offsts transactd dirctly from projcts and as a rsult, through brokrs stply dclind (down 40% and 58% from 2012, rspctivly). Rtailr sals wr unchangd (22 ). Govrnmnts playd an important markt rol in 2013, as both offst buyr and supplir, whil privat sctor-ld offst dmand fll by 46% to 35. A full 20.3 was attributd to multinational corporat buyrs. Enrgy, transportation, fi nanc, and insuranc providrs wr also ky buyr typs. Combating climat chang was citd as buyrs top offstting motivation bhind 7.2 in transactions. Corporat rsponsibility and ladrship rmaind prominnt motivs. Buyrs also lvragd offst paymnts to incntiviz supply chain sustainability (a first in this rport sris). Existing clint dmand drov 76% of transactd volums in First-tim buyrs mad up th rmaining 24%, but paid signifi cantly blow-avrag prics ($3.7/tCO 2 ) and with a focus on forstry. Projcts that rduc missions from dforstation and forst dgradation mor than doubld thir transaction volums to 22.6, and thir markt valu also incrasd by 35% to $94 million. This growth cam at a (lowr) offst pric of $4.2/tCO 2, down from $7.4/tCO 2 in Around 28.9 of 2013 s transactions wr associatd with th Vrifid Carbon Standard. Markt shar for th Gold Standard saw littl chang from 2012, dspit voluntary buyrs incrasd apptit for Clan Dvlopmnt Mchanism instrumnts. Survy rspondnts rportd 31.8 in thir projct portfolios that rmaind unsold at th nd of 2013, including 12.6 rportd by 36 supplirs that trid to but simply did not fi nd a buyr by yar s nd. Survy rspondnts also projctd a potntial piplin of 277 through All prics ar notd in US Dollars, unlss spcifid othrwis.

6 vi Stat of th Voluntary Carbon Markts 2014 BOX 2: Nw climat, nw markts th voluntary carbon offstting contxt On May 9, 2013, th concntration of carbon dioxid (CO 2 ) in th atmosphr surpassd 400 parts pr million for th fi rst tim in rcordd history. Th milston was qually xpctd and trrifying. Th Unitd Nations Framwork Convntion on Climat Chang (UNFCCC) ngotiats on th prmis of limiting global tmpratur ris to two dgrs Clsius (th warming that scintists hav dmd accptabl for Earth s climat) yt fw xprts still viw this boundary as ralistic. Balancing th carbon quation is arguably th gratst challng of our tim and is, at its root, an conomic problm. Dvlopd country conomis grw up on a dit of GHGs that is now challnging to curtail, whil dvloping countris struggl to fi nanc an altrnativ, low-carbon path to conomic dignity. Markts that fail to acknowldg (or xtrnaliz ) th nvironmntal and social costs of GHG missions contribut to climat chang, but thos that intrnaliz ths costs can play a powrful rol in kping atmosphric GHGs in chck by crating incntivs for mittrs to curb missions and fi nancing activitis that squstr, avoid, or rduc GHGs. Crtain charactristics of grnhous gass lnd thmslvs to a markt-basd approach. First, CO 2 and othr GHGs ar global pollutants, maning that a tonn of CO 2 rlasd from a smokstack in China has th sam warming ffct on th atmosphr as a tonn of CO 2 rlasd from dforstation in th Amazon. Scond, GHGs can b dfind in discrt, masurabl units quivalnt to on tonn of carbon dioxid quivalnt (tco 2 ) and can thus b tradd lik currncy. Carbon markts ar built on ths two principls. Th voluntary carbon markt th subjct of this rport ncompasss all paymnts for third-party missions rductions, calld offsts, that occur outsid of govrnmnt rgulation. Sinc carbon is a global pollutant, ths offsts, ach masurd as on tco 2, may b sourcd from anywhr in th world and com from divrs activitis, from producing wind nrgy in India to capturing mthan from a Canadian landfill to distributing clanr-burning cookstovs in Rwanda. Organizations of any kind, and individuals, too, can thn purchas ths missions rductions to offst or balanc out thir own missions. This can crat conomic ffi cincis in that it allows th last xpnsiv missions rductions to occur fi rst with an quivalnt bnfi t to th global climat. Th voluntary carbon markt oftn srvs as a tsting ground for projct typs and monitoring mthodologis that ar vntually adoptd in complianc-drivn carbon markts (i.., complianc markts ) in which missions ar cappd or taxd through rgulation. It also crats a spac for fi rst movrs to act ahad of national or intrnational climat policy. This rport tlls th story of voluntary carbon offstting in 2013, but bhind th facts and fi gurs ar th hundrds of individual transactions btwn buyrs and sllrs. Som of ths buyrs and sllrs may nvr mt ach othr, but othrs do such as a shipping rprsntativ from Singapor who travld to a thratnd forst in Paraguay to mt th popl who will rciv carbon paymnts from his company. Ths human intractions arn t th goal of th voluntary carbon markt, but thy r indicativ of th ida that an unprcdntd, global problm rquirs crativ, global solutions. distributing clanr cooking dvics with no xpcta tion that thir offsts could also b usd to comply with carbon rgulations. This starkly contrasts with all prvious markt yars whn voluntary fforts to in fl u nc or prpar for futur rgulations (aka prcomplianc ) drov 3 to 16 prcnt of global offst purchass. On of th most prominnt of ths mrging rgulations, California s carbon markt wnt liv last yar, taking with it millions of offsts that wr onc positiond for voluntary us but ar now ligibl for complianc us. 2 Th markt s launch and rcognition of offsts hralds a win for influncrs that workd through th voluntary offst markt to shap rgulation dsign. 2 Ths offsts ar thrfor no longr trackd in this rport sris unlss rportd as sold to voluntary buyrs.

7 Stat of th Voluntary Carbon Markts 2014 vii Figur 1: Historical Markt-Wid Voluntary Offst Transaction Volums Pr Ovr-th-countr Chicago Climat Exchang-tradd Nots: Basd on rsponss rprsnting 76 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts Figur 2: Historical Markt-Wid Valus and Avrag Prics $900 $800 $850 $789 $18 $16 $ Million $700 $600 $500 $400 $473 $433 $587 $523 $379 $14 $12 $10 $8 $/tco 2 $300 $200 $100 $4.6 $7.3 $6.5 $6 $6.2 $5.9 $4.8 $6 $4 $2 $0 Pr $0 Ovr-th-countr markt valu Chicago Climat Exchang-tradd Volum-wightd avrag pric Nots: Basd on rsponss rprsnting 76 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts If on subtracts from markt totals th sizabl offst dmand attributd to California markt actors in rcnt yars and accounts for mutd pr-complianc offst dmand in markts lik Australia and th Unitd Stats (nationally) th limitd scal of purly voluntary action alon was incrasingly vidnt last yar, whn thr of vry four offsts transactd wr sold to prxisting clints. Markt siz would hav shrunk mor sizably wr it not for th ntranc of nw public sctor markt actors dircting thir confi dnc in markt-basd climat fi nanc mchanisms toward non-traditional projcts and programs. Ths public ntitis ar rdfi ning voluntary action as thy xprimnt with govrnmnt-to-govrnmnt carbon paymnts byond th scop of traditional Unitd Nations procsss;

8 viii Stat of th Voluntary Carbon Markts 2014 Volum: Valu: Figur 3: Markt Siz and Avrag Pric Comparison, 2012 and Mt $523 M Mt $379 M % chang 26% 28% All yars 0.8 Bt $4 B Avrag $: $5.9/t $4.9/t 16% $5.9/t Nots: Basd on rsponss rprsnting 76 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts or voluntarily commit to pay abov-markt prics to projcts navigating crippling complianc markt dynamics; 3 or support privat offst projcts with public rsourcs in ordr to snd a signal to invstors. Privat buyrs, too, wr r-invigorating xisting commitmnts by introducing sophistication and a strongr businss cas into thir xisting offst programs. For som, that mant imposing an intrnal pric on carbon that in turn funds thir offst purchass, whil othrs ar ngaging dirctly with projcts to pionr nw mthods to rduc and account for carbon missions producing offsts that th sam company will ultimatly buy. For th fi rst tim, this yar s survy also trackd buyrs utilizing carbon offst paymnts to incntiviz practic chang among producrs in thir supply chains, as wll as to crat nw ways to ngag with customrs and clints around consumr offstting solutions that rlat to companis climat risks. Ths changs had major implications for th standards bodis that coordinat projct and offst crtifi cation. Attntion to masuring and dlivring on public dvlopmnt objctivs intnsifi d, whil in forstry circls public sctor mphasis on scalabl fi nanc drov actors to xplor mchanisms that accountd for th full landscap of intrvntions, actors, and impacts. Larg-scal forst carbon crtification also unitd som xprts and multinational corporations to xplor potntial ffi cincis btwn carbon projct and agricultural commodity crtification. Ths and othr fi ndings ar dscribd in this ighth dition of th Stat of th Voluntary Carbon Markts rport sris, which ach yar is informd by hundrds of rsponss to our annual global survy of offst providrs. Each of ths providrs rsponds on bhalf of a uniqu portfolio of carbon offst projcts and voluntary dmand drivrs. This rport wavs thos rsponss into a cohrnt plot that fi nds markt actors xiting or dbuting on th global stag with offst innovations that incrasingly dfy traditional charactrization in hops of attracting a growing audinc of buyrs and invstors to thir caus. Offst Dmand Dscnds Amidst Markt Transition, Ovrsupply, Slow Economis Following svral yars markd by only slight variations in voluntary dmand, offst supplirs rportd a sharp dclin in both markt siz and avrag pric in Last yar, th markt contractd 4 76 of carbon offsts for immdiat or futur dlivry. As such, th global voluntary offst markt siz shrank by 26% (from million tonns) 5 to pr-2008 lvls. 3 Dspit govrnmnts commitmnt to voluntarily pay projcts abov-markt offst prics, ths offsts ar nonthlss utilizd for complianc purposs and so not includd in 2014 voluntary offstting rport data. 4 This rport collcts data at th point that a contract is signd or trms of paymnt and dlivry ar othrwis agrd. Throughout this rport, transactd and contractd ar usd intrchangably to dscrib ths agrmnts. 5 This numbr is updatd from last yar s rport to rflct an additional 1.8 that was transactd in 2012 and rportd in 2014.

9 Stat of th Voluntary Carbon Markts 2014 ix Figur 4: Historical Comparison of Purly Voluntary and Pr-Complianc Transactions Pr Ovr-th-countr, purly voluntary* Chicago Climat Exchang-tradd Ovr-th-countr, pr-complianc** Chicago Climat Exchang offsts tradd "off-xchang" Nots: Basd on rsponss rprsnting 76 in transactd offst volum (2013); 0.8 BtCO 2 (all yars). *Dfi nd as all offsts transactd for th purpos of rtirmnt. **Dfi nd as all offsts transactd for rsal to or us by futur rgulatd ntitis. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts This partly rsultd from th inxtricabl link btwn nvironmntal markts and thir rgulatory infl uncs, including California s launch as a complianc-basd offst markt 6 rprsnting an avrag of 10 / yar that can no longr b trackd as voluntary. Th California offst markt s transition to complianc dmand is ultimatly a win for North Amrican offst markt participants. In contrast, Australia s failur to prmanntly maintain an offst-inclusiv carbon pric rsultd in stalld dmand for domstic pr-complianc offsts. This rprsnts anothr approximatly 5 that did not s a rpat in If on rmovs 2012 survy rspondnts prcomplianc-drivn offst transactions from th quation and strictly compars yar-on-yar dmand for purly voluntary offsts, 2013 s dclin in markt siz is lss svr down 13% from th prior yar. From this vantag point, th ovr-th-countr (OTC) markt for voluntary offsts in which th majority of offst supplirs and projct dvloprs conduct businss rmaind largr than in but still fll short of mor rcnt rport yars (Figur 4). Turning to markt valu, th global avrag offst pric also fll by 16% to US$4.9/tCO 2, from $5.9/ tco 2 in Global markt valu trackd alongsid ths falling prics in 2013, to total $379 million. Down 28% from 2012 s $523 million markt, last yar s valu is comparabl to lvls trackd in 2007 a yar on supplir dscribd as th v of climat-rlvant carbon markt activity. Supplirs say th markt s lowr avrag prics and dampnd dmand ovrall ar rfl ctiv of incrasingly comptitiv prssurs among offst supplirs facing dprssd complianc offst prics and ovrsupply which ld to dumping in som markts; slow conomic rcovry in th Europan Union that found many loyal offst buyrs grappling with truncatd budgts for corporat social rsponsibility (CSR) programs and/or markting; and continud issuanc of larg offst volums from purly voluntary offst projcts in th forstry and clan cookstovs projct sctors. Last yar s prics nvrthlss rmaind wll abov th avrag pric of offsts undr th Unitd Nations Clan Dvlopmnt Mchanism (Crtifi d Emissions Rductions, or CERs), whr rgulatd EU-basd buyrs could obtain offsts for a fraction of a US dollar in CERs ntrd th voluntary offst markt, too, but thir avrag pric was on par with 6 Ths offsts ar thrfor no longr trackd in this rport sris unlss rportd as sold to voluntary buyrs.

10 x Stat of th Voluntary Carbon Markts 2014 Figur 5: Transactd Volum and Avrag Pric by Sllr and Buyr Typs, 2013 ( and $/tco 2 ) 7.1 $6.1 Projct dvlopr $ Rtailr/wholsalr/brokr 4.4 End buyr $ $6.2 Nots: Basd on rsponss rprsnting 32 in transactd offst volum for which both buyr and sllr typs wr rportd. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts othr traditional voluntary programs (btwn $4.5 and $4.6/tCO 2 ). Across all of th yars of markt activity trackd in this rport sris, voluntary buyrs hav fundd 844 in missions rductions worth $4 billion and at an avrag historical pric of $5.9/tCO 2. Projct Dvloprs, Brokrs Most Affctd by Markt Slump Last yar, transaction volums wr quitably disbursd among typs of markt actors much to th frustration of projct dvloprs that, in 2012, rportd transacting at last half of all offst volums. This yar s data rvals that th volum of offsts fl owing from projcts and as a rsult, through brokrs saw th stpst absolut dclin (down 40% and 58% from 2012, rspctivly) whil th volum supplid by rtailrs was unchangd (22 ). Dmand for th 22.6 supplid dirctly by projcts in 2013 was also fairly vnly split btwn offst rtailrs sking supplis to sll on to thir clints, and nd buyrs that dcidd to forgo rtail srvics and ngag dirctly with projct dvloprs. As in 2013, projct dvloprs chargd nd usrs slightly lowr prics than did rtailrs (Figur 5). Public Sctor Buyrs, Supplirs Addrss Markt Gaps National and sub-national govrnmnts and multilatral public agncis playd an important (and largly nw) markt rol in As both buyrs and supplirs, govrnmnts and quasi-govrnmnt ntitis supplid 15% of transactd offsts as projct dvlopr and bought anothr 19% of all offst purchasd or fi nancd. This includs a significantly-sizd transaction btwn Grman dvlopmnt bank KfW (Krditanstalt für Widraufbau) and Brazil s Acr stat, which was communicatd as multi-yar paymnts for prformanc to support th stat s forstry sctor through Grmany s REDD+ Early Movrs Programm (REM). Acr agrd to dlivr and rtir on KfW s bhalf 8 in missions rductions btwn 2013 and It also committd to rduc and rtir an additional tonn for ach tonn rducd and rtird through th REM programm. 7 Evn xcluding this agrmnt, public sctor supplirs and buyrs togthr accountd for 3.4 in transactional activity in 2013, up from 2 in th prior yar. Public programs rprsntd in this yar s data rangd from th Kora and Japan Vrifi d Emissions Rduction programs (K-VER and J-VER); to Italy s rgional carbon markt; to offst purchass by th UN Environmnt Programm (UNEP) and UN Offi c for Projct Srvics (UNOPS) to nutraliz prvious yars organizational missions. Privat Buyrs Markt Shar Falls, but Climat Commitmnts Dpn Whil th privat sctor rmaind th largst sourc of dmand, transactional activity attributd to this sctor fll by 46% to 35. Buyrs in this catgo ry rprsntd multinational corporations 7 Rad mor about th bilatral agrmnt hr: KfW-Entwicklungsbank/Wr-wir-sind/Nws/Nws-Dtails_ html. (Last accssd May 15th, 2014). Th missions rductions rsulting from this transaction ar not usd to offst any missions in th traditional sns, nor will b cancld against any complianc obligation. This rport sris nonthlss tracks all paymnts for missions rductions that ar contractd and accountd for on a pr-tonn basis, and particularly if thy ar rtird. Th REM Programm s transaction thrfor mts this survy s mthodological rquirmnts for inclusion.

11 Stat of th Voluntary Carbon Markts 2014 xi $ Million $14 $12 $10 $8 $6 $4 $2 Figur 6: Markt Shar, Valu, Avrag Pric by Supplir Profit Status, 2012 and 2013 $75 M $251 M $50 M $ M 40 M 60 M 80 M 100 M For-profit (2013) For-profit (2012) Not-for-profit (2013) Not-for-profit (2012) Public sctor (2013) Public sctor (2012) For-profit (2013) Not-for-profit (2013) Public sctor (2013) % shar: Rnwabls Forstry and land us Gass Houshold dvic Efficincy and ful switching Mthan Othr Nots: Basd on rsponss rprsnting 76 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts (20.3 ), small- to mdium-sizd ntrpriss (9 ), and domstic companis (6.2 ). Dvloping country-basd buyrs wr most likly to buy from projcts in thir country and to sk offsts from forstry. Brazilian cosmtics company Natura s support to th Paitr Suruí popl is on such xampl. Enrgy utilitis, fi nanc and insuranc providrs, th transportation sctor, and companis ngagd in industrial procsss (non-nrgy) obtaind th largst shar of volums among privat ntitis. Supplirs point out that ths sctors ar notably lss consumr-facing and mor likly to alrady b rgulatd than thir countrparts in communications, vnts, tourism, or rtail product markts, for xampl. This may spak to th fact that companis such as ths with rcognizabl climat and rgulatory xposur ar mor likly to obtain offsts alongsid othr businss-as-usual practics. Thy may also hav lss low-hanging fruit to choos from whn it coms to rducing oprational missions and so must rly on offsts to achiv dpr rductions. Ths shifts in buyr rprsntation ar rfl ctd in thir changing motivations, too, whr public rlations and branding almost fll off th motivations map in

12 xii Stat of th Voluntary Carbon Markts % 19% 14% Figur 7: Markt Shar by Buyr Motivation, 2013 (% Shar) 32% 10% 2% 2% PR/branding purposs; 1% Anticipation of dirct rgulation; 0.7% Climat chang affcts businss modl; 0.2% Promot corporat/organizational/ staff larning; 0.03% Offst rsal Climat-drivn mission; to combat climat chang Corporat social rsponsibility Dmonstrat climat ladrship in industry, policy Engag customrs/clints to offst missions Incntiviz supply chain practic chang, sustainability Othr Nots: Basd on rsponss rprsnting 40 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts , whil th mor altruistic motivation pursuing a climat-drivn mission; combatting climat chang shot up to th top of th list driving 7.2 in offst purchass, from 2.7 in Clos bhind, buyrs pursuing corporat rsponsibility targts and industry or policy ladrship wr also prominnt. For th fi rst tim last yar, buyrs lvragd ovr 0.5 as incntiv paymnts to producrs, purchas rs, or communitis within thir supply chains. This rspons option was addd whn companis b gan rporting thir supply chain risks particularly forst risks through corporat transparncy initia tivs lik th Carbon Disclosur Projct and committing to sustain abl sourcing through industry roundtabls and undr th guidanc of organizations such as th Dutch Sus tainabl Trad Initiativ (IDH) and th Consumr Goods Forum. This fi nding is th fi rst indication in this rport sris that companis with said risks ar indd paying supplirs or othrs within thir businss sphr of infl unc to vrify and dlivr on thir carbon prformanc. As in prvious yars, offst rsal was th singl most prominnt motivation. Accounting for th full valu of th fl ow of products through offst rtailrs in 2013, ths actors collctivly supportd th transaction of 33.3 or 44% of total markt siz by volum. As a buyr, thy purchasd/sourcd 11.5 in 2013, an incras of 3.4 ovr Th Europan privat sctor including a larg contingnt of offst rtailrs rmaind th most prominnt buyr typ and rgion for offst dmand, though thir purchas volums fll 36% to 28 in Supplirs in th rgion attribut this fi nding to collctivly poor opinions of th CDM within th businss community, which colord thir viws of voluntary offstting. Givn th rgion s stillmutd conomic conditions, thy also citd a shift in corporat attntion to othr sustainability masurs (including supply chain carbon managmnt) that ar prcivd to achiv mor straightforward conomic and nvironmntal fficincis for thir businss. Dmand in North Amrica saw a mor signifi cant drop than in Europ, down 68%, from 30 in 2012 to 9 in 2013 and vn if strictly accounting for purly voluntary dmand (down 53% from 20 ). Hr, markt participants say that with US fdral climat lgislation in th rar viw mirror and no nw markt on th horizon, companis ar continuing to tak climat action but offsts ar rarly a part of thir stratgy. Evn so, th rgion boastd nw or continud offstting commitmnts from a numbr of by-now-rcognizabl corporats including Microsoft, Th Walt Disny Company, Bay, Duk Enrgy, Intrfac, Inc., and UPS. Rsponss to a nw qustion in this yar s survy rval that th largst volum of tonns sold to nw buyrs was purchasd by Australians (1.3 ). Australia saw 100% growth in its volum

13 Stat of th Voluntary Carbon Markts 2014 xiii Volum purchasd (Million tonns) 28 M Figur 8: Transactd Volum, Valu and Shar of Markt Valu by Buyr Rgion, 2013 Buyr rgion valu ($ Millions) $254 M Buyr rgion Europ Buyr shar of markt valu 9 M 3 M $78 M $30 M North Amrica Ocania 4% 7% 1% 0.2% 0.1% 1 M 0.4 M $9.7 M $4.1 M Asia Latin Amrica 36% 52% 0.2 M $1.3 M Non-EU Europ 0.1 M $1.3 M Africa Nots: Basd on rsponss rprsnting 43 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts of purly dmand in 2013, th largst proportion of which rfl ctd th rgion s historical go-to projct catgoris: rnwabls and forstry and land us. Findings Illuminat Importanc of Rlationships, Idntification of Nw Buyrs Supplirs hav xisting buyrs to thank for continud markt activity currnt clint dmand was bhind 76% of transactd volums in First-tim buyrs lik KfW mad up th rmaining 24%. Excluding th KfW/Acr stat transaction from th analysis paints a mor sobring pictur for traditional markt playrs, sing fi rst-tim buyrs transact a mr 3 and at an avrag pric of $3.7/tCO 2. Nw buyrs also almost xclusivly sought inxpnsiv forstry offsts whil rnwabl nrgy projct offsts rmaind th brad and buttr of xisting clints. Supplirs rportd slling 9 to buyrs that wr not nw to th markt in 2013, but had prviously bought offsts from anothr supplir. This includs buyrs lik offst rtailrs that sourc offsts from a varity of dvloprs, as wll as traditional corporat clints sking bttr prics, portfolio options, or srvic lswhr. Findings suggst that this switch may oftn occur on th basis of pric, as xprincd buyrs that switchd to nw supplirs in 2013 paid slightly lss than thos that rmaind with thir longtim partnrs in carbon offst managmnt ($5.2/ tco 2 vrsus $5.9/tCO 2 ). REDD Uproots Rnwabls as Top Sourc of Offst Markt Activity Rling from s intnsifying pric comptition and cash fl ow issus, many forst carbon projct dvloprs concdd to buyr dmands

14 xiv Stat of th Voluntary Carbon Markts 2014 Figur 9: REDD+ Offst Transactd Volum and Supplir Count by Pric Rang ( and Count of Supplirs) $0 - $2.99 $3 - $5.99 Volum $6 - $8.99 $9 - $11.99 Supplir count >$12 $/tco 2 Nots: Basd on rsponss rprsnting 22 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts Supplir count and droppd thir prviously abov-avrag prics. Bcaus dmand for forstry offsts is signifi cantly snsitiv to changs in pric, 8 th voluntary forst carbon markts in turn surpassd 2012 s sizabl transaction volum 9 to total 27. In no catgory was this chang mor dply flt than among projcts that rduc missions from dforstation and forst dgradation (REDD). Hr, transaction volums mor than doubld to 22.6, whil markt valu also incrasd by 35% to $94 million. Evn xcluding KfW and Acr stat s sizabl agrmnt to prformanc-basd paymnts for REDD, th projct typ rtains 2013 s top spot. This growth cam at a (lowr) pric, with supplirs rporting an avrag REDD offst pric of $4.2/tCO 2 (down from $7.4/tCO 2 ) which would hav bn vn lss ($3.5/tCO 2 ) had it not bn buoyd by Acr s sizabl transaction, approximatd at $5/tCO 2. REDD s pric drop was not common to all projct dvloprs and supplirs as sn in Figur 9, lss than a handful of REDD offst supplirs sold a full 28% of tonns at lss than $3/tCO 2. Rnwabl nrgy projcts long an important projct typ among voluntary offst buyrs du to Figur 10: Markt Shar by Projct Typ, 2013 (% Shar) 24% 7% 4% 4% 4%3% 2% 2% 2% 2% 1% 1% Efficincy; 1% Biogas; 1% Gothrmal; 1% REDD/Avoidd convrsion Clan cookstovs Wind Afforstation/Rforstation Watr filtration Wast hat rcovry 5% Agro-forstry; 1% Grass-/ Rangland; <1% Livstock mthan; <1% Othr; 1% Landfill mthan ROR hydro* Larg hydro N 2 O Improvd forst mgmt. Ful switching 38% Biomass Nots: Basd on rsponss rprsnting 60 in transactd offst volum. * Run-of-rivr hydropowr. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts Avrag lasticity cofficint of 4.5 across all rport yars. 9 Th volum of forstry offsts trackd in this rport will continu to grow as Ecosystm Marktplac ngags in ongoing data collction to inform its Stat of th Forst Carbon Markts rport (xpctd fall 2014). Similarly, forstry offst transaction dtails prsntd in this rport ar sourcd from th Stat of th Forst Carbon Markts rport (fall 2013), th most rcntly updatd sourc of markt data.

15 Stat of th Voluntary Carbon Markts 2014 xv thir availability, rlativ cost-ffctivnss, and straightforward natur cdd th top spot to th forstry and land-us sctor last yar, transacting 18.7 in 2013 compard to 26 in Though prics for wind projcts in particular continud to com down (by 36% to $2.1/tCO 2 ), projct typs that voluntary buyrs dmd to b mor co-bnfi tsorintd also bcam mor affordabl and thus comptitiv last yar. from projcts at som stag of dvlopmnt undr VCS. Mor than a third of VCS tonns (9.6 ) claimd or aimd to additionally dlivr social or nvironmntal bnfi ts undr th Climat, Community and Biodivrsity Standards (CCB Standards) for forst carbon projcts or according to th SOCIAL CARBON standard (1.3 ) as buyrs continud to show intrst in offsts with crtifi d bnfi ts byond carbon. Th nxt most popular projct typ was houshold dvic distribution, including th sal or givaway of clanr, mor ffi cint, and lss harmful cookstovs or watr fi ltration dvics. Som offst supplirs in this catgory hld out for high prics at th cost of lss dmand, whil othrs sought contracts with govrnmnt agncis in countris lik Swdn that wr offring mor favorabl, longr-trm contract trms. Whil th govrnmnts offr of favorabl contract trms and pricing wr voluntary, th rsulting offsts will ultimatly b usd for complianc with th Europan Union Emissions Trading Systm, so ar not includd in this rport analysis. Propritary Standards R-Engag whil Indpndnt Standards Hold on to Lad Th Vrifi d Carbon Standard (VCS) hld on to its top spot among third-party standards guiding th dvlopmnt and monitoring of carbon projcts; 28.9 of 2013 s total volum was transactd Total volum of transactd tonns that achivd or ar pursuing VCS crtification nvrthlss fll sharply from 42.9 in 2012, as propritary standards and intrnally dvlopd projct guidanc stagd a comback. Whil prvious yars saw consolidation around a fw ky indpndnt, pr-rviwd standards, mor than on fi fth of transactd offsts rportd following an intrnal/propritary standard in This includs activitis associatd with mrging subnational (or jurisdictional ) programs for which consnsus around program dvlopmnt, masuring, monitoring, and safguards approachs is only rcntly mrging from markt shaprs lik th World Bank s Forst Carbon Partnrship Facility which will invst in and support activitis xclusivly at th jurisdictional scal. In th mantim, th forst carbon offst markt has smingly rturnd to an xprimntal phas, sing standards lik th Acr Carbon Standard, th Natural Forst Standard, and Global Consrvation Standard (among othrs!) bubbling to th surfac. VCS rlasd updats to its Figur 11: Markt Shar for Popular Indpndnt Third-Party Standards and Crtifications (% Shar) 15% <1% 2% 21% 16% 47% 7% 5% 3% 1% 1% No standard; 1% Plan Vivo; <1% VER+; <1% Othr; 2% VCS only VCS+CCB Standards VCS+Social Carbon Intrnal/Propritary Gold Standard VERs Gold Standard CERs CERs/ERUs CAR CCB Standards + "othr" ACR 29% Nots: Basd on rsponss rprsnting 60 in transactd offst volum. Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts 2014.

16 xvi Stat of th Voluntary Carbon Markts 2014 jurisdictional REDD rquirmnts in Octobr 2013, howvr, and has a Mmorandum of Undrstanding with Acr stat to pilot a jurisdictional mthodology. Projcts adhring to Th Gold Standard managd to maintain thir markt hold vn in th contxt of a tough markt sing only a slight 3% drop in 2013 volums across both voluntary and crtifid missions rductions (VERs and CERs). Dspit a mor notabl 9% drop in rportd prics, Th Gold Standard s avrag pric rmaind signifi cantly highr than th markt ovrall ($8.5/tCO 2 vrsus $4.9/tCO 2 ). Throughout 2013, th program workd to incorporat into its scop its acquisition of CarbonFix, alongsid partnrships with Fairtrad and th Forst Stwardship Council, th aim bing to introduc a forstry and land-us lmnt to its stakholdrs. Th Gold Standard also grw its urban prsnc with a nw Citis Programm aimd at incntivizing nrgy ffi cincy and wast managmnt in dvloping citis through prformanc-basd paymnts that would includ but not xclusivly prioritiz missions rductions. Both th Climat Action Rsrv (CAR) and th Amrican Carbon Rgistry (ACR) turnd thir attntion to California s complianc markt in 2013, nwly functioning as approvd Offst Projct Rgistris. Rgulators also adaptd svral CAR protocols for us as complianc offst protocols (with only slight modifi cation) and dmd a fw xisting CAR projct protocols as ligibl for rciving arly-action crdit. Whil for th fi rst tim in svral yars ACR offst supplirs rportd a 27% incras in markt activity, many CAR projct dvloprs and supplirs traind thir sights on California s complianc offst markt and thus lost som footing in th purly voluntary offst markt. CAR and ACR continud to dvlop nw offst protocols such as ric cultivation and wtlands rstoration, using th voluntary markt as a proving ground in hops that ths mthodologis will also vntually b adaptd for California complianc. As th fi rst commitmnt priod of th Kyoto Protocol cam to a clos at th nd of 2012, uncrtainty about th rol of th CDM in a futur climat agrmnt ran high sing som CDM projct dvloprs turn to voluntary buyrs to offl oad CERs or Emissions Rduction Units (ERUs, from projcts basd in dvlopd countris). Togthr, CERs and ERUs hld 7% of ovrall markt shar, with an additional 0.4% of transactd CERs also crtifi d to Th Gold Standard. Asia-Basd Projcts Rtain Top Supplir Status; Brazil s Succss Grows on Trs Th CDM s markd prsnc in Asia was again apparnt in 2013, whn 21 transactd wr associatd with Asian projcts. Around 70% of ths tonns wr gnratd by rnwabl nrgy projcts and transactd at blow-avrag prics ($1.7/tCO 2 ). Asian clan nrgy offsts rmaind a stapl in most rtailr portfolios. Projcts in India and China wr th most common Asian offst sourcs, primarily du to thir abundant stocks of inxpnsiv rnwabl nrgy offsts. Elswhr in th rgion, buyrs and thir supplirs paid incrasing attntion to Asia s forstry and nrgy ffi cincy projcts driving markt growth in Malaysia and Indonsia. With svn Chins pilot missions trading schms now activ, intrst in Chins offst dmand is high, but rgulatory opacity rgarding offst ligibility has ld China s supplirs and buyrs to tak a wait-ands approach. Manwhil, Japan consolidatd its voluntary standards th J-VER and J-CDM into th nw J-Crdit Schm, whil Kora continud to iron out th dtails of its proposd 2015 missions trading schm. Thailand and Indonsia ar xploring similar voluntary missions trading schms for lat 2014 or Manwhil, Latin Amrica gav Asia s traditional offst supply countris a run for thir volum, sing 19 transactd from th rgion s projcts. Through its 8 transaction with KfW, Brazil s Acr stat along with sizabl transactions from a fw REDD+ projcts in othr locals pushd Brazil ovr th top as th markt s most popular projct location in Pru, Mxico, and Argntina also xprincd similar, though smallr, gains in volum. Rgional avrag prics fll 39% to an avrag $5.0/tCO 2, rflcting lowr prics for forst carbon offsts. Though Latin Amrica s projct dvloprs do focus on forstry, rnwabl nrgy, houshold dvic distribution, and nrgy ffi cincy projcts mad modst gains. Africa-basd projcts transactd a rcord 11 in 2013 as Knya rtaind its just-podium-shy plac as th world s fourth largst offst supplir, gnrating 4.8 in transaction volum. Th Dmocratic Rpublic of Congo, on of four countris to b accptd into th World Bank s Carbon Fund REDD piplin in 2014, also mad a strong showing on th voluntary markt last yar, with DRC-basd projcts

17 Stat of th Voluntary Carbon Markts 2014 xvii Figur 12: Markt Projctions, Historical Data, and Supplir Prdictions Projctd Valu in 2020 PREDICTED RATES $1.8 bn Projctd Valu in 2020 HISTORICAL RATES $0.9 bn 2013 survy prdictions 2014 survy prdictions Volum projctd, historical growth rat Historical transaction volum Nots: Basd on rsponss from 156 offst supplirs activ in Sourc: Forst Trnds Ecosystm Marktplac. Sharing th Stag: Stat of th Voluntary Carbon Markts transacting 1.4. Projcts in Ghana, South Africa, Tanzania, and Uganda, among othr countris, also contributd to th continnt s growing markt shar, which is drivn by buyr intrst in projcts with strong halth or biodivrsity bnfi ts such as clan cookstov distribution, watr purification, and REDD. Th US stat of California launchd its cap-and-trad program in January As such, th transaction of millions of offsts from forstry, livstock mthan managmnt, and domstic ozon-dplting substancs (ODS) projcts in North Amrica that wr prviously trackd as voluntary migratd into th complianc markt last yar. Absnt ths transaction volums, th rgion s rmaining purly voluntary projcts transactd 5.1 compard to 23 rportd in Th majority of Europ s 2013 transactions wr from wind, hydro, and landfi ll mthan projcts implmntd in Turky (3 ). Bcaus Europan Union (EU) mmbrs Kyoto Protocol commitmnts mans that th majority of thir missions ar alrady cappd via th EU Emissions Trading Schm, EUbasd projcts supplid th voluntary carbon markt with only 0.5 in Howvr, projct dvloprs in th Unitd Kingdom wr activ in th 2013 markt, issuing mor than 400,000 Pnding Issuanc Units rprsnting forward sals undr th UK s Woodland Carbon Cod. Th Italians also dvlopd afforstation/rforstation offsts for futur sal to public-sctor voluntary initiativs, as wll as an Italian Forst Carbon Cod to standardiz voluntary mthodologis. Projcts in Ocania suffrd a stback in 2013, as Australia s nw govrnmnt vowd to rpal th country s missions trading schm that took ffct in Australia s offst markt will likly b rplacd with an Emissions Rduction Fund, which would srv as a rvrs auction for th govrnmnt to buy from compting sllrs. As th dtails of futur dmand ar bing dcidd, uncrtainty looms ovr Australian projct dvloprs and, accordingly, volum fll sharply by 94%. Th Carbon Farming Initiativ may hav also cratd a bottlnck for supply, as th procss for arly mthodology approval took longr than xpctd, with th fi rst approvals not coming through until Markts Past, Prsnt, and Futur: Waiting Out Prics, Scaling Back Supply Though offst supplirs spculat that th voluntary offst markt is sing mor xit than ntry, many actors from th privat, public, and non-profi t sctors rmain committd to prformanc-basd paymnts for missions rductions vn if th script has changd. Th markt rmains illiquid and faturs a rang of projct typs, rgional trnds, and buyr motivations

18 xviii Stat of th Voluntary Carbon Markts 2014 that shar th stag with offsts from diffrntiatd projcts sold at a rang of pric points. Survy rspondnts prdictd that th voluntary offst markt will grow to 175 in 2015 and 300 in 2020 a mor tntativ growth rat than thy projctd in last yar s survy though thy ovrstimatd th siz of last yar s markt by 52%. Thy also projct that 2014 s markt will transact 138, which would rquir an 81% growth rat from 2013 s markt siz, valud at an additional $302 million. Basd on th voluntary markt s historical avrag pric of $5.9/tCO 2, supplirs prdictions plac markt valu at $1.8 billion in This is roughly doubl th $0.9 billion that would b rquird to sustain th markt s avrag historical growth rat (11%) ovr th sam priod. Survy rspondnts rportd 31.8 in thir projct portfolios that rmaind unsold at th nd of Th majority of thos tonns (12.6 or 43%) wr rportd by 36 supplirs that trid to but simply did not fi nd a buyr by yar s nd. Anothr 23% of unsold volum (7.1 ) was associatd with thr supplirs that plan to xit th markt in 2014 du to insuffi cint dmand. At last 18 offst supplirs rportd that thy did not transact 6 in 2013 bcaus thy wr holding out for mor favorabl offst prics. Tn supplirs wr still in ngotiations with buyrs at yar s nd thus thir 3.6 that rmaind unsold in 2013 will likly b rportd as a transaction in nxt yar s survy. In trms of projcts piplin rprsnting th missions rductions that could b brought to markt in th nxt fi v yars if dmand warrantd projct dvlopmnt survy rspondnts rportd a potntial 277 through Th siz of this piplin is significantly rducd from what was rportd in 2013, whn projct dvloprs targtd bringing up to 1,440 offsts to markt in th nxt fi v yars undr mor favorabl markt conditions. Markt Outlook: Staging a Scond Act? Important dvlopmnts in lat 2013 and th fi rst half of 2014 ar crating th conditions for voluntary carbon markt projcts and standards to play a nw or xpanding rol in mrging complianc markts. A policy papr rlasd in 2014 by South Africa s Trasury Dpartmnt and Dpartmnt of Environmntal Affairs pitchs a plan to accpt offsts vrifi d to voluntary standards VCS, GS, and CCB alongsid CDM in th country s upcoming carbon tax, 30 of which could potntially b gnratd from missions rductions projcts locatd in South Africa (as rquird by th policy), according to an analysis by Camco Clan Enrgy. As th US Environmntal Protction Agncy movs to rgulat missions from powr plants, northast stats involvd in th Rgional Grnhous Gas Initiativ ar pushing for a markt-basd mchanism that will allow for allowanc trading across stat lins and a potntially strongr markt signal for th program s xisting offst provisions. Manwhil, mthodologis auditiond in th voluntary carbon markt hav alrady mad thir way into California s complianc program, which continus to rviw and adapt nw protocols that ar undrgoing groundtruthing with support from voluntary offst buyrs. California s carbon markt is also th most immdiat hop for complianc dmand for REDD offsts, though both this markt and any intrnational markt for REDD+ stmming from a UN framwork ar still svral mor yars in th making. In gnral, futur dmand for missions rductions activitis could com from bottom-up complianc carbon markts mrging around th world. Kazakhstan launchd its missions trading systm at th bginning of 2013, and South Kora is planning its start dat for China also opnd four of its svn plannd subnational carbon markts in 2013, offring a potntial liflin to CDM projct dvloprs to r-rgistr thir offsts as China Crtifid Emission Rductions, which could ftch highr prics in th domstic markts. China s Ministry of Financ rcntly announcd plans to mov forward with a national carbon markt within thr yars. On th voluntary sid, a sustaind intrst in cobnfi ts sts th stag for som out-of-th-box carbon products in coming yars as prformanc-basd paymnts for missions rductions ar incrasingly usd as a quantifi abl proxy for othr outcoms such as watrshd protction, biodivrsity gains, rducd halth risks, and climat rsilinc. A rcnt Gold Standard study found that th co-bnfits of 109 of its crtifi d projcts addd an additional $686 million in annual valu tid to nvironmntal, conomic and social rsults byond carbon. Rsarch by CDP rvals that th privat sctor is incrasingly concrnd about climat chang risks such as mgastorms, prcipitation shifts, and drought, which dirctly affct th opration of utilitis, food and

19 Stat of th Voluntary Carbon Markts 2014 xix bvrag companis, fi nancial fi rms, and othr privatsctor playrs. Whthr or not incrasing rcognition of climat risks lads to a rnwd intrst in offstting rmains to b sn, but a CDP rport rlasd in lat 2013 rvald that at last 29 companis oprating in th US us an intrnal pric on carbon ranging from $6/tCO 2 to $60/tCO 2 to guid invstmnt dcisions. In som cass, this tax lvid on businss divisions crats a pot of mony that is applid to missions rductions activitis such as nrgy ffi cincy rtrofits and tlconfrncing. In othrs, it is also lvragd to purchas offsts that dpn th achivmnt of any in-hous missions rductions. Prsntly and in coming yars, th landscap of carbon markts is and will b mor fragmntd than most markt participants imagind vn fi v yars ago. Yt, this fragmntation has mad spac for som unxpctd climat actors to dbut thir innovations. As th costs of climat chang mitigation and adaptation continu to ris, fi nding and markting ffi cincis that rsult in both missions rductions and sustainabl dvlopmnt is imprativ. This, prhaps, is th ky rol of th voluntary offst markts to financ innovation, shard rsponsibility and rapid solutions that might prvnt th arth s climat from going compltly off-script.

20 xx Stat of th Voluntary Carbon Markts 2014 Sponsors and Supportrs Our Donor and Sponsors Donor Sponsors Supportrs Amrican Carbon Rgistry

21 Stat of th Voluntary Carbon Markts 2014 xxi Sponsors ClimatCar ( mobiliss th powr and scal of privat fi nanc to dlivr projcts with positiv nvironmntal and social impacts. W hlp many of th world s lading brands, organisations and govrnmnts scal up th impact of thir initiativs by invsting thir rsourcs in projcts that dirctly combat climat chang and povrty, improv halth and incras community wlfar. Sponsors and Supportrs Winnr of a 2014 Qun s Award for Sustainabl Dvlopmnt - for outstanding contributions to tackling climat chang and allviating povrty - ClimatCar has cut ovr 16.5 million tonns of CO 2 and improvd th livs of mor than 6 million popl. EcoAct ( a major carbon stratgy company, offrs thorough consulting xprtis to organizations wishing to dvlop thir nvironmntal approachs, rduc thir nvironmntal footprints, anticipat rgulatory dvlopmnts or lssn thir dpndncy to fossil fuls. Th fi rm brings clints its xprtis at ach stp in th procss, from quantifying nvironmntal footprints through tools such as GHG Protocol, Lif Cycl Analysis for products and srvics and Enrgy Prformanc Diagnosis and watr footprints to rcommnding, implmnting and fi nalizing missions rductions. EcoAct offrs Clan Dvlopmnt Mchanism/Joint Implmntation xprtis for custom-mad carbon stratgis and provids ddicatd consulting srvics on offstting programs with a human dimnsion, carfully slctd for thir nvironmntal and conomic bnfi ts, and most importantly, thir positiv social impacts. EcoAct s in-dpth knowldg of ligibl programs is supportd by its prsnc in Europ, Latin Amrica, Africa and its ntwork of xprts in Asia. With an y toward maintaining a quality sustainabl dvlopmnt approach, EcoAct s srvics mt high standards and crtifi cations, and th fi rm has committd to th ICROA Chartr for voluntary carbon offstting. SCX - Santiago Climat Exchang ( aim is to rdfi n climat chang mitigation and adaptation as a sourc of corporat comptitivnss and social and nvironmntal inclusivnss. SCX offrs prim CO 2 Nutral crtifi cation for products & srvics diffrntiation and works with organizations looking to link thir climat ngagmnt with thir cor businss not rlying solly on CSR policis. SCX spcialists hav bn activ playrs in Chil and th LATAM rgion s discussions rgarding baslin scnarios for climat chang, cap-and-trad options, grn taxs, and markt instrumnts for nvironmntal rgulation. SCX was foundd by tn lading corporat playrs in Chil, with th aim to dvlop nw businss modls that fostr grn invstmnt and sustainability practics in th country and th rst of th Latin Amrican rgion. Today, SCX is an activ catalyst for innovations that chang th paradigm of climat chang as a sourc of costs into a mor proactiv on whr public awarnss is translatd into opportunitis for local dvlopmnt. Thus, SCX sks to bcom th Latin Amrican hub for cosystm markt building rathr than a platform limitd to traditional xchang.

22 Th Family of Forst Trnds Initiativs Th Family of Forst Trnds Initiativs Using innovativ financing to promot th consrvation of coastal and marin cosystm srvics Using innovativ Th financing Family to of promot th A Th global Family platform Forst of Forst for transparnt consrvation of coastal Trnds and marin Trnds Initiativs cosystm Initiativs information srvics on cosystm srvic paymnts and markts Using innovativ Th Family financing of to promot th consrvation Forst of coastal Trnds and marin Initiativs cosystm srvics Forst Trad & Financ A global platform for transparnt information on cosystm Using innovativ srvic financing paymnts to promot and markts th consrvation of coastal and marin cosystm srvics A global platform for transparnt information Bringing sustainability to trad and financial invstmnts on cosystm in th srvic global paymnts markt for and forst markts products Watr Initiativ Forst Trad & Financ A global platform for transparnt information Protcting on cosystm watrshd srvic srvics paymnts through and markts and Using innovativ financing to promot th incntivs consrvation A that global complmnt of platform coastal and for convntional transparnt marin cosystm information managmnt srvics on cosystm srvic paymnts and markts Bringing sustainability to trad and financial invstmnts in th global markt for forst products Forst Trad & Financ Building capacity for local Forst communitis Trad & Financ and govrnmnts Bringing sustainability to trad and and financial to ngag A global financial Bringing in platform mrging for transparnt sustainability nvironmntal information to trad and financial markts invstmnts invstmnts on cosystm in in th th global srvic paymnts markt for and for forst markts forst products products invstmnts in th global markt for forst products Forst Trad & Financ Building Businss capacity and Biodivrsity for local communitis Offsts Program, and govrnmnts dvloping, tsting and supporting bst practic in biodivrsity offsts Businss Bringing and Biodivrsity sustainability Offsts to trad Program, and financial dvloping, tsting invstmnts to ngag and supporting th global Building capacity mrging bst practic markt for forst products for local communitis nvironmntal in biodivrsity and govrnmnts markts offsts to ngag in mrging nvironmntal markts Building capacity for local communitis and govrnmnts to ngag in mrging nvironmntal markts Building Building Businss capacity and for Biodivrsity for local communitis Offsts Program, and and dvloping, govrnmnts to tsting ngag to and supporting mrging bst nvironmntal practic in biodivrsity markts offsts Building Businss a and markt-basd Biodivrsity program Offsts to Program, addrss dvloping, watr-quality tsting (nitrogn) and supporting problms in bst th practic Chsapak in biodivrsity Bay and byond offsts Businss and Biodivrsity Offsts Program, dvloping, tsting and supporting bst practic in biodivrsity offsts Communitis and Markts Th Family of Building a markt-basd program to addrss watr-quality Supporting Businss local (nitrogn) and problms Biodivrsity communitis in th Offsts to mak Chsapak Program, informd Bay dvloping, dcisions and byond rgarding tsting and thir supporting bst practic in biodivrsity offsts Forst participation Incubator Trnds in Initiativs nvironmntal markts, strngthning thir trritorial rights Building a markt-basd program to addrss watr-quality Linking local producrs and communitis (nitrogn) problms in th Chsapak Bay and byond to cosystm srvic markts Incubator Building Building a a markt-basd Linking local producrs program to and to addrss communitis watr-quality watr-quality (nitrogn) (nitrogn) problms to in cosystm in th Chsapak srvic markts Bay Bay and byond Larn mor about our programs at and byond Incubator Larn mor about our programs at Using innovativ financing to to promot th th consrvation Linking of local coastal of coastal producrs and and marin and cosystm communitis Incubator srvics to cosystm srvic markts Linking local Incubator producrs and communitis to cosystm srvic markts Linking Public-Privat local producrs Co-Financ and Initiativ communitis Crating Larn innovativ, mor about our programs at A global to cosystm intgratd, platform for srvic and transparnt markts fficint financing Larn mor about our programs information to support on th transition to low missions and zro cosystm srvic paymnts and markts dforstation land us Larn mor about our programs at Forst Trad & Financ Larn mor about our programs at Bringing sustainability to trad and financial invstmnts in th global markt for forst products