October 31, 2023

The Carbon Conundrum: Mandatory vs. Voluntary Market Dynamics

(Left) Rain Vääna and (Right) Andrus Treier

CEO at Environmental Investment Centre Andrus Treier and founder & CEO at KWOTA Rain Vääna, visited Äripäev radio, their discussion likely centered on the differences between mandatory and voluntary carbon markets. The mandatory carbon market usually refers to regulated schemes imposed by governmental bodies or international agreements, setting caps on emissions and allowing the trading of carbon allowances or offsets to achieve emission reduction targets.

Conversely, the voluntary carbon market operates on a different premise. It involves companies, organizations, or individuals voluntarily choosing to offset their carbon footprints by purchasing carbon credits or offsets. These voluntary actions are often seen as a way for entities to demonstrate their commitment to sustainability, even beyond what is legally required.

The conversation on Äripäev radio has covered the advantages, challenges, and impact of both mandatory and voluntary carbon markets in combating climate change. They discussed the potential synergy between these markets and how they contribute to global efforts to reduce greenhouse gas emissions. Their insights delved into the effectiveness, transparency, and prospects of these markets in driving sustainability initiatives while considering the role of policies, technological advancements, and public awareness in shaping these markets.

In the coming years, companies will have to publicly show the impact of their activities on the environment and society. The negative environmental impacts of many companies and economic sectors are far greater than we would like, and their reduction is difficult and time-consuming.

However, there are also economic sectors whose activities bind greenhouse gases. There are climate-positive companies in forestry, in some agricultural sectors, as well as among those companies that can manage secondary raw materials circularly and reduce resource use.

The desire of companies to reduce their environmental impact has led to carbon credit trading or the voluntary carbon market. In this market, climate positives can offer their credit, and climate negatives can buy it to offset their impacts. The voluntary carbon market is still in its infancy, and there are many risks and unanswered questions.

How can we prevent companies from simply compensating and, above all, actually dealing with their environmental impacts? What is the price of carbon credits? How can credit sustainability be ensured?

More can be found in the link: https://www.aripaev.ee/raadio/episood/metsa-istutamine-on-tore-aga-jalajaljega-tuleb-tegeleda-sisuliselt

Alyona Stadnik

Senior Writer

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