Priority change and driving factors in the voluntary carbon offset market

Voluntary carbon offset markets play an important role in climate change mitigation by deploying technologies in order of lowest abatement cost. The objective of this study is to identify the key drivers of changes in the volume of carbon credits issued in voluntary registry offset markets from 2006 to 2020 using a decomposition analysis framework. The results show that the volume of issued carbon credits related to forestry and land use increased from 2006 to 2015 due to priority increases and scale expansions in REDD+ projects. In addition, the reasons for the priority changes in carbon credits issued varied according to the scale of carbon offset programs in each region. The comparison of scale effect and carbon offset program priority is a useful tool for understanding changes in carbon credits issued according to project technology and region. The very rapid increase in forestry carbon credits issued does however pose important policy implications given it has been accompanied by widespread indications of poor governance and questionable outcomes in terms of CO₂ reduction. In light of the IPCC's reliance on carbon credits the need for thoroughgoing policy reform is underlined.