Market Analysis: Voluntary Compensation of Greenhouse Gas Emissions in Germany

Together with "sustainable", adelphi carried out a comprehensive analysis of the German market for voluntary compensation of greenhouse gas emissions on behalf of the German Emissions Trading Office (DEHSt) at the Federal Environmental Agency (UBA). This study intends to verify the findings of a preliminary analysis, having been carried out in 2010, and to analyse the current conditions.

More and more people want to compensate their harmful emissions by avoiding greenhouse gases in other areas. Popular examples are compensations for air travels, which travel agencies and airlines offer to their customers when booking. More and more companies offer green “climate neutral” products or provide an entire range of climate neutral business operations. Over the past few years, the number of providers of compensation services and the range of climate-neutral products in Germany has rapidly increased. However, so far there is a lack of recognition procedures and binding standards for such voluntary compensation measures. This leads to a fluctuating quality on a market that is insufficiently transparent for consumers.

In that regard, the German market analysis has created more transparency and provides an overview of the stakeholders and their profits. For that purpose, the current developments of the compensation market were examined in view of supply and demand. The newly collected data was compared with the results of the last market study from 2010, which had also been created by adelphi and sustainable.

Subsequently, the results of the analysis have been compared with trends in the international market in order to classify the developments of the German market. In addition, qualitative differences between the voluntary market and the compulsory market have been analysed: Through a differentiated assessment of the contribution of the voluntary market particularly in terms of quality and the credibility of projects, the project has established greater transparency for the consumers of compensation services and has promoted approaches to protect the climate as well as sustainability. The gained insights will serve as a basis to provide the DEHSt with recommendations, for example in view of the need to support quality standards for compensation projects.

Furthermore, a consolidated quality comparison of different standards have been prepared for consumers. The resulting transparency of the project or certificate features is a prerequisite for establishing the importance of the voluntary market as a complement to the compulsory market and for ensuring that it opens up further potentials for global climate change mitigation, sustainability and innovation.