Lesson 1, Topic 1
In Progress

Risks and challenges in the Voluntary Carbon Market

Besides other common challenges in the global carbon markets, some of the associated risks to the Voluntary Carbon Market are the following:

  • Credibility and quality: The potential presence of ineffective projects may create a risk on ensuring real emissions reductions.
  • Market oversupply: It can undermine the financial viability of projects affecting the carbon credits prices.
  • Regulatory uncertainty: Evolving regulatory frameworks and policies around it may affect the demand of carbon credits directly impacting on the participants.
  • Price volatility: Instability on prices may lead to a decrease on the interest of buyers and sellers on the market.
  • Reputational risks: It is essential to maintain the transparency with robust procedures to mitigate any risks such as inaccurate reporting or instances of fraud which can affect the reputation and trust of the market.
  • Lack of standardization: As the VCM has no standardized regulatory standard and protocols, the inconsistency in the market can affect their transparency.