Voluntary offsetting

About carbon market demand

The carbon market is made up of both compliance and voluntary demand.

Compliance demand

Compliance demand is driven by regulatory requirements set by the government. Companies or other entities that emit greenhouse gases may be required to offset a portion of their emissions by purchasing and cancelling carbon credits.

In accordance with municipal, local, state, and territory government laws, private organizations and corporations may be required to purchase and cancel carbon credits.

Voluntary demand

In the context of climate change, voluntary demand refers to the decision of individuals or businesses to offset their greenhouse gas emissions. This is achieved by purchasing carbon data rights certificates (CDRCs) and cancelling the BRUs in the CDRCs. The BRUs are retired from the BidCarbon Unit and Certificate (BUC) Registry, when they aren't legally required to do so.

People choose to voluntarily cancelling units for a variety of reasons, including: 

● to meet social responsibility and sustainability goals

● to meet organisational emissions or energy targets use claims

● market differentiation

● environmental sustainability

● to offset or compensate for greenhouse gas emissions

● to report under ESG reporting

The participants in voluntary markets may include companies, non-profit organizations, individuals, and governments.

Potential buyers of carbon offsets in the voluntary market may also be interested in the environmental, economic, social, and cultural sustainability performance associated with the carbon offset projects.

The voluntary carbon market is experiencing rapid growth as the ambition to offset emissions generation gains momentum with businesses, governments, and households.

Mandatory and voluntary reporting

Companies may be subject to mandatory reporting obligations, including climate-related financial disclosure reporting.

Companies may be required to report:

● greenhouse gas emissions

● progress towards emissions reductions

● strategies for managing emissions.

This transparency can motivate companies to make voluntary purchases and surrendering of carbon data rights certificates. By showcasing these investments, companies can demonstrate their dedication to climate change mitigation. This can enhance their reputation with investors, customers, and the community.

Sources of voluntary demand

Businesses seeking to offset their emissions may opt to purchases carbon data rights certificates:

● Offset scope 1 emissions

● Reduce scope 2 emissions footprint

● Offsetting claims and international climate commitments

● Other programs

Reducing carbon footprint