CARBON CREDITS FOR SUB-SAHARAN AFRICA - lumes

3.3.1 REGULATORY CONTEXTUnlike the compliance market, the voluntary schemes do not rely on legallymandated reductions (Bayon et al., 2008). There is no emissions cap to drive carboncredit demand, and no regulatory body attempts to unify VERs across project types,standards, prices, or transaction volumes. The voluntary market governance system ismore horizontal and networked; with no central formalized regulation. The lack ofstandards, deficit of uniformity and transparency in the voluntary market has led toskepticism regarding credibility of the offsets produced under the voluntary offsettingschemes (Harris, 2007; Taiyab, 2006). In order to address the criticism and ‘to makemarket more investor-friendly’ (Bayon et al., 2008) stakeholders involved in thesector introduced over a dozen of voluntary offset standards in the past few years,designed registries and attempted to document the size of the market. There areseveral voluntary standards adopted so far, including the Gold Standard, whichprovides guidelines on sustainable development among other aspects for the CDMunder Kyoto Protocol and has a parallel scheme for the voluntary market.Implementation of self-imposed standards represents a form of self-regulation asopposed to compliance market and is under development at the moment. Severalstudies that cover various features of standards are available (Kolmuss et al., 2008a;Kolmuss et al., 2008b; Merger, 2008). This study only considers standards applied foridentified projects in the region of Sub-Saharan Africa.3.3.2 SUPPLY, DEMAND AND ACTORSThe voluntary segment of the market is currently operated by a number ofbusiness companies and non-profit organizations in North America and Europe(Harris, 2007; Sterk & Bunse 2004). Those companies invest in carbon-reductionprojects both in industrialized and developing countries and sell the emissions creditsto buyers and final consumers in the industrialized ones. The voluntary marketrepresents purchases of carbon credits by organizations or individuals who are notlegally obliged to generate any emissions reductions, or those, willing to haveemission reductions above what is legally required. Therefore, being under no legalconstraints governing the kind of emission offsets that they purchase, they can beflexible in deciding on the type of carbon credits they buy, source of credits oramount of credits. VCM, which is not limited by 2012 timeframe, when the Kyotoprotocol expires, might be more appealing to private funds that try to avoiduncertainty of post-Kyoto regime.Generally, the VCM is driven by consumer demand (Bayon et. al., 2008;Harris, 2007; Ecosystem Marketplace, 2007, Taiyab, 2006). Nature of the demand onVCM differs from compliance market, as purchasers are interested in projects thatrespond to the goals of their CSR programs or individual values (EcosystemMarketplace, 2007). Consequently, the offsets provided through the voluntaryschemes are rather driven by CSR concerns or individual intentions to reducepersonal footprint, rather than necessity driven and highly dependent on consumer19