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Carbon Offsets
Offset Use Guidelines I Analyst Note I November 2023
Tuesday, 28th November 2023

In this report, we review current retiring trends, the most important factors and threats guiding buyer behaviour in the VCM as well as existing voluntary and national guidance intended to help buyers navigate the risk-laden landscape of credit retirements. We argue that contrary to what the mainstream narrative suggests, it is not only reputational risk that buyers are taking on when investing in and retiring offset credits, but also, and increasingly, legal and financial risks as a result of the proliferation of litigatory action in the space as well as a progressively more forbidding regulatory space.Through presenting a number of case studies of national and voluntary guidance, we demonstrate that compulsory guidance is the only guaranteed way of mitigating the risks in carbon offset retirements – however, there seems not to be much appetite for such policy-making. Instead, what we see is an increasing preference for moving towards national, subnational and supranational carbon pricing mechanisms, and it is through these schemes that legislations hope to regulate and manage carbon offsetting schemes.This does not mean an absolute end-game for the VCM, as we argue, since some of the market’s vital lifelines remain in place, such as CORSIA, continued investment in initiatives like the Leaf Coalition and some upcoming demand for largely unregulated (and not correspondingly adjusted) VCM credits from countries such as the Gulf States. However, we do claim that the VCM as we know it is coming to an end, and previous expectations of its exponential growth are misplaced.

Table of Content
  1. Demand Tendencies in 2023
  2. Offsetting Risks: Reputational, Legal and Financial
  3. Regulatory Case Studies
  4. Compliance Offsets – the Way Forward?
  5. Conclusion

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cCarbon has mapped both the demand as well as supply of SAF to size the market. The research indicates that global SAF consumption in 2022 (as per offtake agreements) stood at 494 million litres.
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