What is VER ?
VER stands for
Voluntary Emissions Reductions or Verified Emissions Reductions.
Both refer to the emerging market for carbon credits outside the
Kyoto Protocol compliance regime. The voluntary market may at
present be smaller and less liquid than the compliance market,
however, general market opinion is that the wider scope of the
voluntary market, and growth led by the private sector, not public
policy, means that it has a strong potential to outstrip the mature
market size of the compliance regime.
Demand for
VERs has been gradual and intermittent, but since the beginning of
this year there appears to have been a shift in this market to more
structured growth, facilitated greatly by the development of
credible intermediaries such as the Bank of New York, which created
a registry for VERs in June 2006, as well as the widespread
acceptance of the minimum quality standard embodied by the Voluntary
Carbon Standard (VCS), designed by the International Emissions
Trading Association (IETA), and non-profit organizations The Climate
Group and WWF.
There are
three main drivers for demand in the voluntary market. Firstly, as a
key component of a company's marketing strategy, linked to corporate
social responsibility. Secondly, as a profit-making enterprise where
financial participants build portfolios of VERs in order to
speculate in this market. Thirdly, as a valuable learning exercise
for forward-looking companies in business sectors which anticipate
being included in a future compliance regime, and which wish to
develop a competitive advantage through familiarity with carbon
credit market mechanisms.
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