Explaining the Voluntary Carbon Market

West African nations are currently hosting a variety of VCM activities and initiatives, numbering in the hundreds. Participating in this market segement offers both opportunities and challenges for governments in developing countries. This informational note offers a high-level overview of the ongoing activities and crediting programmes present in the region, highlighting the crucial role of robust implementation and standards in promoting sustainable development and nurturing a green economy.

For further information on VCM activities in individual West African countries, please visit our Member Country page.

Carbon crediting programmes are developed and administered by private organisations — typically international non-governmental organisations (NGOs). GHG crediting programmes – also called carbon standards – establish a set of rules, procedures and methodologies that are requirements for certified carbon credits generated through carbon market projects and activities. Organisations administering these standards play a crucial role in safeguarding the quality of VCM carbon credits and providing credibility to the baseline and credit system on which the VCM relies.

A carbon credit is a transferable unit representing the reduction or removal of one ton of greenhouse gas (GHG) emissions. Within the VCM, these credits are generated through various activities, such as projects and programmes certified by independent crediting programmes.

Organisations often utilise carbon credits purchased from the VCM to substantiate climate-related claims associated with their entities, products, and services. Nevertheless, there has been significant uncertainty surrounding the generation of these credits and the assertions tied to them. Various organisations and governmental bodies, in consultation with stakeholder groups, are developing guidance on best practices to address this issue. This collaborative effort aims to offer greater clarity on the matter, recognising both the reputational risks involved and the need to strengthen the effectiveness of voluntary carbon markets in addressing climate challenges. The following information note showcases that credible claims should be based on mitigation outcomes meeting internationally established criteria and outlines action to pursue this objective effectively.

In response to the uncertainty and scandals that have become commonplace in the VCM, several international initiatives have emerged in recent years with the aim of enhancing the integrity and credibility of this market segment. These initiatives advocate for transparent and scientifically-aligned practices to advance meaningful climate action and build confidence in the VCM. The following information note provides an overview of diverse rulebooks, codes of practice, benchmarks and governance mechanisms developed by entities and groups of stakeholders in order to establish a more transparent and accountable VCM ecosystem to help ensure that this market segment serves as a credible and effective instrument in the fight against climate change.

Image source: ICVCM and VCMI (2023)

Governments can engage with carbon markets in a variety of ways for example as regulators, activity proponents, or facilitators. Their responsibilities include designing appropriate regulations that ensure that voluntary carbon projects align with national strategies and adhere to environmental and social safeguards. Moreover, public agencies can directly implement or finance programmes and activities to create incentives that attract carbon investments for priority sectors.