ICF International Study Forecasts Explosive Growth in the Voluntary Carbon Offsets Market

Demand for Voluntary Carbon Offsets Expected to Reach 400 Mt/CO<sub>2</sub>e Per Year by 2010



November 30, 2006 -

Today ICF International (Nasdaq:ICFI) launched a detailed report entitled Voluntary Carbon Offsets Market Outlook. Although the voluntary carbon offsets market has steadily grown in recent years—as measured by the number of transactions and market value—it is still quite small compared to the market for project offsets that companies can use for compliance purposes under the Kyoto Protocol. The World Bank estimates that in 2005 the market for voluntary carbon offsets made up less than 10 million tonnes (Mt) of CO2e, or less than 1 percent of global carbon market transactions and less than 1 percent of the total market value of US$11 million.

The International Emissions Trading Association and World Bank estimate that the market for carbon credits has increased to US$ 2.3 billion in the first nine months of 2006 and that the overall carbon market is now worth more than US$21.5 billion. The market is experiencing significant growth as companies not subject to caps on carbon emissions decide voluntarily to offset some or all of their emissions from a variety of sources directly or indirectly related to their business activities. A variety of obstacles could, however, impede the market’s future growth.

"To continue its recent explosive growth, the voluntary carbon market must decisively address the significant persistent challenges of credibility, fragmentation, and overlap with the mandatory carbon emissions market," said Eric Lounsbury, carbon market analyst in ICF’s London Office. “The emerging standards for project development and verification are a positive sign that the voluntary market is ready to take the next step in its maturation and development. The market will, however, need to adapt to meet increased stakeholder expectations on environmental integrity and to maintain its niche alongside the market for Kyoto-compliant carbon credits.”

"Our analysis examines several scenarios for the evolution of the market for voluntary carbon offsets, and our base case forecasts global demand of around 400 Mt of CO2e per year by 2010," said Abyd Karmali, managing director for ICF’s European operations. “Market drivers among the different categories of buyers are diverse and include reputation, experience, and principle. Some companies not subject to caps are low emitters and face inherently high costs of reducing emissions, but nevertheless wish to build a reputation for environmental stewardship and are choosing offsetting as one of the components in their climate strategy. Others recognize that participating in voluntary carbon markets is excellent preparation for future life under a mandatory cap-and-trade scheme. Some companies that have begun to use offsets are doing so based on the principle that it is a means of sharing the responsibility for managing emissions between producers and consumers. We see rapid growth in each segment.”



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For Immediate Release
United Kingdom Contact: Abyd Karmali
Tel: 44 (0) 20.7092.3005

United States Contact: Douglas Beck
Tel: 1.703.934.3820


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