Voluntary Carbon Markets
Beyond the NZ ETS compliance market, there’s a global voluntary carbon market (VCM) where companies and individuals purchase carbon credits to offset emissions voluntarily. This market operates by different rules and standards.
Compliance vs Voluntary Markets
NZ ETS (Compliance Market)
- Mandatory for covered sectors
- Domestic only — NZUs trade within NZ
- Government regulated — EPA/MPI oversight
- Clear rules — Climate Change Response Act
- One credit type — NZU
Voluntary Carbon Market
- Optional — buyers choose to participate
- Global — international credits and buyers
- Self-regulated — industry standards bodies
- Varying standards — multiple certification schemes
- Many credit types — VCUs, Gold Standard, etc.
Why Voluntary Markets Matter
For Sellers
Even if your forest earns NZUs in the ETS, you might also:
- Access premium pricing for high-quality projects
- Attract corporate buyers seeking specific outcomes
- Stack credits (carbon + biodiversity)
- Diversify market exposure
For Context
Understanding voluntary markets helps you:
- Recognise where NZUs sit in the global carbon landscape
- Understand corporate buyer behaviour
- Anticipate future market developments
- Make informed decisions about selling options
International Standards
Integrity Council for the Voluntary Carbon Market (ICVCM)
The ICVCM sets the Core Carbon Principles (CCPs) — the emerging global standard for carbon credit quality.
Core principles include:
- Additionality — would the carbon benefit have happened anyway?
- Permanence — is the carbon storage secure long-term?
- No double counting — is the credit only counted once?
- Sustainable development — are there co-benefits?
- Transparency — is project information publicly available?
Major Standards Bodies
| Standard | Focus | Recognition |
|---|---|---|
| Verra (VCS) | Largest global registry | Widely accepted |
| Gold Standard | High quality, co-benefits | Premium pricing |
| American Carbon Registry | US-focused | Growing |
| Climate Action Reserve | North American | Established |
NZ Credits and International Standards
The Challenge
NZ ETS credits (NZUs) were designed for domestic compliance, not voluntary market standards. Key differences:
- Additionality questions — would the forest exist without carbon credits?
- Permanence concerns — production forests can be harvested
- Methodology differences — NZ rules vs international expectations
- No ICVCM assessment — NZ schemes aren’t being assessed against CCPs
Toitū Envirocare’s 2023 Decision
In November 2023, Toitū Envirocare — NZ’s leading carbon certification provider — announced it would transition away from accepting NZ carbon credits:
“While there are excellent indigenous forestry projects in Aotearoa, the NZ schemes that issue carbon credits are not being assessed by the Integrity Council for the Voluntary Carbon Market against the quality requirements, so cannot show that they meet expectations.”
Toitū now only permits NZ credits that pass ICROA (International Carbon Reduction and Offset Alliance) due diligence standards.
What This Means
- Domestic compliance market remains — NZUs still valuable for ETS obligations
- Some voluntary uses limited — corporate carbon neutrality claims may not use NZUs
- Quality perception matters — international buyers may prefer other credits
- Future uncertainty — standards continue evolving
NZ Voluntary Certification Programmes
Toitū Programmes
Toitū offers several certification levels:
| Programme | Description |
|---|---|
| Toitū carbonreduce | Measure and reduce emissions |
| Toitū net carbonzero | Measure, reduce, and offset |
| Toitū climate positive | Remove more than you emit |
| Toitū Enviromark | Environmental certification |
These are internationally accredited under ISO 14065.
CarboNZero History
The carboNZero programme (now part of Toitū) was the world’s first internationally accredited greenhouse gas certification scheme. It provided the foundation for NZ’s voluntary market development.
Corporate Offsetting Trends
What Companies Want
Corporate buyers increasingly seek:
- Removal credits — actual carbon removal, not avoided emissions
- High integrity — meeting ICVCM or equivalent standards
- Co-benefits — biodiversity, community, SDG alignment
- Verifiable outcomes — third-party certification
- Story value — projects they can communicate about
NZ Opportunities
Despite challenges, NZ forestry projects can appeal through:
- Native regeneration — strong permanence story
- Biodiversity outcomes — measureable co-benefits
- High-quality establishment — professional management
- Transparent monitoring — rigorous documentation
Premium Credits from NZ
Native Forest Premium
Some native forest projects command premiums because:
- Permanent (no harvest)
- Strong biodiversity outcomes
- Cultural values (Māori involvement)
- Climate resilience
- Story value for buyers
Biodiversity Stacking
Emerging opportunity to sell:
- Carbon credits (ETS or voluntary)
- Plus biodiversity credits
- Combined value may exceed carbon alone
This is early-stage but developing rapidly.
Challenges for NZ Projects
Scale
- Many NZ projects are small
- Transaction costs can be high
- Aggregation may be needed
Standards Alignment
- NZ methods differ from international
- Verification costs can be significant
- Methodologies may need adaptation
Market Access
- Limited direct buyer relationships
- Intermediary margins
- Competition from global supply
Price Premium
- Premium credits require premium effort
- Additional monitoring and verification
- May not be worth it for all projects
Emerging Developments
Carbon Dioxide Removal (CDR)
Growing distinction between:
- Emissions reductions — doing less harm
- Carbon removal — actively drawing down CO₂
Removal credits (including forestry) may command increasing premiums.
Article 6 of Paris Agreement
International rules for carbon trading under Paris Agreement are developing. This may create:
- New pathways for NZ credits internationally
- Corresponding adjustments requirements
- Government-to-government trading opportunities
Technology Integration
- Satellite monitoring improving verification
- AI analysis of forest carbon
- Blockchain for transparency
- Lower-cost verification methods
Should You Pursue Voluntary Markets?
Consider If:
- You have native forest with strong biodiversity
- You can meet additional verification requirements
- You have direct relationships with corporate buyers
- Scale justifies transaction costs
- You’re interested in premium positioning
Probably Not If:
- You have standard exotic production forestry
- The domestic ETS meets your needs
- Additional costs outweigh premium potential
- Scale is too small for efficient verification
Practical Steps
1. Understand Your Project
- What makes it distinctive?
- What co-benefits can you demonstrate?
- What’s your permanence story?
2. Assess Standards
- Which standards might apply?
- What’s required for certification?
- What are the costs?
3. Find Buyers
- Corporate sustainability teams
- Carbon brokers and aggregators
- Voluntary market platforms
4. Consider Aggregation
- Join with similar projects
- Share verification costs
- Access larger buyers
Key Takeaways
- Voluntary markets operate separately from ETS — different rules, standards, buyers
- International standards are tightening — NZUs don’t automatically qualify
- Native forestry has advantages — permanence, biodiversity, story value
- Premium credits require premium effort — additional verification costs
- The market is evolving rapidly — standards and opportunities continue developing
- Domestic ETS remains valuable — compliance market isn’t going away