Michael Gillenwater is a researcher at Princeton University and also the Dean of the GHG Management Institute where the mission is to train and develop a community of experts with the highest standards of professional practice in measuring, accounting, and managing greenhouse gas emissions; meeting the needs of governments, corporations, and organizations large and small.

Michael is amongst the presenters at Voluntary Carbon Markets, New York.

What do you consider to be the most interesting developments and biggest challenges in the American voluntary carbon market at this time?
Harmonization in the face of lethargic governments.  There are critical issues of standardization and policy that are unlikely to be settled by the market itself.  Only governments have the authority to bring the level of harmonization necessary to truly commoditize GHG emission offsets so that they will have broad-based and long-term credibility in a voluntary market context. 

If regulated emission reductions become mandatory in the US, what does the future hold for the voluntary market?
Voluntary GHG offset markets will still likely have a role to play in a future with stringent mandatory mitigation policies.  But obviously, the extent of that role will be limited to projects in unregulated sectors and countries.  We should not forget that there can also develop a voluntary market in purchasing and retiring compliance emission allowances (although this market for SO2 and NOx allowances in the United States has never really developed to have any significant volume).  This market will compete with voluntary offset project credits.

What are the barriers to project developers looking to generate offsets?
Credibility and uncertainty are the key challenges.  All investors face uncertainty (i.e., risk), but the type faced by voluntary GHG offset investors include a lack of certainty about the very nature of the commodity they are selling.  This uncertainty in the very nature of the good allows for a "market for lemons" to develop, which can erode, if not destroy, the market entirely because consumer have not practical way to evaluate the quality of what they are purchasing.

What safeguards are required to ensure sustainable growth?
We have called for government action to police the voluntary GHG offset market.  Although non-governmental efforts are laudable, they are unlikely to be sufficient.  Luckily, some governments are starting to fill this gap (e.g., the UK, Australia, Sweden, and Norway).  Unfortunately, the country with the largest voluntary market, the United States, appears to be completely failing in this regard (I say this having just attended the Federal Trade Commission workshop on this topic).

For more information, take a look at our article in Nature Reports: Climate Change.

Policing the voluntary carbon market
Voluntary greenhouse-gas emission offset markets are in need of government oversight.
http://www.nature.com/climate/2007/0711/full/climate.2007.58.html

ENDS