The carbon market continues to expand in scale and complexity. The topic of government-led carbon credit issuances and transfers is particularly en vogue: from UN-led conversations on carbon trading and carbon border adjustment mechanisms, to provincial carbon offsetting schemes, there is an increasingly interconnected web of compliance and regulatory schemes emerging.
To ensure that we stay current with the latest advancements, AlliedOffsets has introduced an innovative addition to our premium dashboard: a Policy Analysis View. This feature offers a comprehensive analysis of the governance structures within the top nations by credit issuances, mapping out their carbon credits schemes and providing an overview of its function.
Our analysis is divided into three sections: Regulatory Framework, Institutional Framework, and International Context, distinguishing between the governance structure and the latest developments taking place in the domestic and international fora for each specific country.
Apart from the analysis we have also created a unique map for each individual country to provide more clarity into how carbon schemes can differ from one nation to another.
In addition to launching the Policy Analyses to our clients, we are also launching an internal policy scoring tool that assigns a score to each nation’s progress as it relates to developing the VCM.
By evaluating the level of commitment displayed by governments towards VCM development, tracing which types of registries have been created, and keeping track of the latest relevant laws and regulations, we can gain a better picture of which nations are likely to issue more credits, and which have warning signs that may hinder issuances. .
Our methodology is designed to assess and analyse the progress of the VCM using four key indicators: Political Commitment, Institutional Framework, Policy Process, and Market Framework. The four criteria were devised according to factors that affect carbon market development in terms of relevance, effectiveness, efficiency, and coherence.
- Political Commitment evaluates the level of government involvement in the development of the VCM, their attitude towards it, and whether they follow through on their commitments.
- Institutional Framework assesses the coherence of the organisational structure within the VCM. By mapping out the institutional landscape, we can identify areas where additional structures or mechanisms may be needed.
- Policy Process tracks each nation’s developmental path, how transparent it is, and the latest regulations and laws that have been established.
- Market Framework is a quantitative measure of the latest developments in each nation’s domestic carbon market. It examines the growth of projects, the diversity of sectors covered, and the level of sectoral participation.
The findings of our Policy Tracker Methodology reveal that China, India, and Colombia demonstrate exceptional performance in terms of their recent VCM policy developments.
The policy tracker is an important development for the wider AlliedOffsets database in that the country scores will be used to create more accurate projections for the supply of credits from the most prominent countries in the VCM. We will supplement the supply forecasts with demand dynamics based on corporate commitments to generate even more accurate carbon price estimates. Stay tuned for more on this soon!
Find out more here, and feel free to get in touch for a trial for how to navigate our Premium Dashboard on Tableau!
