LONDON (Reuters) - The Voluntary Carbon Standard Association launched its global multiple registry system on Tuesday, but delayed a key component which will enable carbon emission offsets to be transferred across registries.
Offset companies and traders have been eagerly awaiting the new system, which will enable the transparent tracking and trading of offsets called Voluntary Carbon Units (VCUs).
"The system will give the market transparency as people will know their VCUs aren't being double sold. It will also give VCUs an added element of robustness and help standardization so they become a more tradable commodity," VCSA's chief executive David Antonioli told Reuters.
A key feature of the system, allowing VCUs to be transferred across registries, would save buyers from opening multiple accounts with different registries, but it will not be immediately available due to technical complexities, the VCSA said.
"We should be able to provide some clarity on this issue by April 1," said Antonioli.
Carbon offsetting is a way for companies or individuals to voluntarily compensate for unavoidable greenhouse gas emissions by funding cuts in carbon dioxide elsewhere.
The market for such offsets was worth some $330 million in 2007 and still has room to grow.
It has been criticized for poor quality and double-counting, or selling the same emissions reductions twice, prompting the development of standards and registries.
Several standards exist but Voluntary Carbon Standard (VCS) credits are particularly popular because they are of a high enough quality and low enough price to attract buyers.
GOOD NEWS FOR THE MARKET
Exchange operators APX and TZ1 and French state bank Caisse des Depots will act as registries in the VCS system. A fourth participant, Bank of New York Mellon, pulled out.
"They didn't sign up to the terms we agreed with other registries. I can't say why," said Antonioli.
The system can be expanded to include other registries if they meet robust requirements, after an exclusive one-year period with the current registries comes to an end.
VCUs, which currently trade between $5-7, are expected to rise due to the introduction of the system.
"I imagine there will be an uptick in the value of credits because there is now a transparent process to track them," said Antonioli.
The market's liquidity should also increase.
"The launch of the VCS registry is a positive development in the ongoing evolution of the voluntary carbon market. Intra-registry account transfers will boost liquidity and encourage trades of smaller clips," said Grattan MacGiffin, head of voluntary carbon markets at MFGlobal in London.
The system should also encourage more interest from the U.S. in carbon offsets as new climate change legislation is debated there.
"This robust global registry system will boost buyer interest in the VCS, particularly in the U.S., and drive further consolidation of the global market," said Bill Townsend, chief executive of U.S. project developer Blue Source.
(Reporting by Nina Chestney; Editing by James Jukwey)