The carbon market has now become one of the key mechanisms in the global effort to reduce greenhouse gas emissions.
In addition to government-regulated carbon markets, there is also the Voluntary Carbon Market, which provides opportunities for individuals and companies to voluntarily reduce their carbon footprint.
This article will explore in more detail what the Voluntary Carbon Market is, how it works, and the role of local communities within it.
What is Voluntary Carbon Market?
The Voluntary Carbon Market (VCM) is a marketplace where individuals, companies, or organizations can purchase carbon credits to offset the greenhouse gas (GHG) emissions they produce. Unlike carbon markets regulated by the government (such as Emission Trading Systems), participation in this market is voluntary and not bound by legal obligations.
The primary goal of the VCM is to support projects that reduce emissions, such as reforestation, forest conservation, and renewable energy initiatives.
The carbon credits generated from these projects are then sold to entities that wish to offset their carbon footprint as part of their social responsibility or corporate sustainability initiatives.
The Paris Agreement establishes global goals to limit global temperature rise. The VCM contributes to achieving these goals by providing a mechanism for countries and companies to meet their emission reduction commitments.
By purchasing carbon credits through the VCM, they can offset their emissions and support projects that contribute to environmental sustainability.
VCM Mechanism
The mechanism in the Voluntary Carbon Market begins with the development of projects that can reduce or sequester carbon emissions. For example, reforestation projects or peatland conservation efforts aim to prevent deforestation.
These projects are then verified by independent agencies using international standards such as the Verified Carbon Standard (VCS) or the Gold Standard to ensure that they meet the criteria and produce real and measurable emission reductions.
Projects must undergo an independent verification process to ensure that the claims of emission reductions are valid and accountable.
Once a project is verified, the resulting carbon credits can be traded in the market. Entities wishing to reduce their carbon footprint, such as companies or individuals, can purchase these credits and use them to offset their emissions.
The Role of Local Communities
Indonesia has significant potential to become a major player in the global voluntary carbon market. With its vast tropical forests and various conservation initiatives, it can provide substantial nature-based carbon credits.
From 2016 to 2020, Indonesia contributed approximately 15% of total Voluntary Carbon Market (VCM) transactions in Asia. With the right policies, potential revenue from carbon credit trading has the potential to reach billions of dollars.
Local communities play a crucial role in the VCM projects in Indonesia. Their involvement not only helps to guarantee the sustainability of the projects but also enhances their well-being through empowering programs.
Local communities are essential in forest conservation projects, serving as monitors to oversee and protect forest areas from illegal deforestation and wildfires.
Additionally, they receive training in environmentally friendly agricultural techniques through reforestation and peatland restoration projects, which not only supports the success of these initiatives but also provides stable livelihoods.
Community participation in project planning processes also ensures that the benefits generated align with local needs and interests.
Author: Ainur Subhan
References:
KEMENTRIAN KEUANGAN RI. (2023) Kontribusi Indonesia pada Voluntary Carbon Market (VCM). accessed online at 13/10/2024 from https://www.kemenkeu.go.id/informasi-publik/publikasi/berita-utama/Kontribusi-Indonesia-pada-Voluntary-Carbon-Market
Iqbal. (2023) Perbedaan Pasar Karbon Sukarela dan Pasar Karbon Wajib. Lindungi Hutan. accessed online at 13/10/2024 from https://lindungihutan.com/blog/pasar-karbon-sukarela-dan-wajib/