Technical guidance on carbon credits, EU ETS, voluntary carbon markets, and blockchain carbon market innovation for Ireland and the EU.
Carbon Markets | Voluntary Carbon | Ireland
Meta Description: Voluntary vs compliance carbon markets explained for Ireland by Michael English (IMPT.io CTO). VCM vs EU ETS, credit types, integrity challenges, and Ireland's carbon market opportunity.
Target Keywords: voluntary carbon market Ireland, compliance carbon market EU ETS, VCM vs ETS Ireland, carbon offsets Ireland, voluntary carbon credits Irish businesses, Michael English carbon markets Ireland
There are fundamentally two types of carbon markets: those you must participate in (compliance markets) and those you choose to participate in (voluntary markets). Understanding the difference — and the relationship between them — is essential for any Irish business developing a credible carbon strategy.
Compliance markets exist because governments have created legal obligations to hold permits for emissions. Participation is mandatory; penalties for non-compliance are severe.
EU ETS: The world's largest compliance market, covering approximately 40% of EU GHG emissions. Regulated entities must surrender EU Allowances (EUAs) equal to their verified annual emissions.
EU Effort Sharing Regulation (ESR): Covers sectors not in the EU ETS (primarily transport, buildings, agriculture, waste, and small industry). Sets binding national targets for each EU member state. Ireland's 2030 target is a 42% reduction from 2005 levels in ESR sectors — currently one of the furthest-behind countries from target.
Ireland's Climate Action Act 2021: Enshrines legally binding carbon budgets. The EPA monitors compliance. While currently no direct financial penalty mechanism for missing national targets exists at the corporate level (costs fall on the state), companies will face increasing regulation as Ireland scrambles to meet obligations.
CORSIA: International aviation compliance market via ICAO.
In Ireland, compliance market participants include:
Voluntary carbon markets (VCMs) allow organisations and individuals to purchase carbon credits beyond legal requirements. Motivations include:
Avoidance/Reduction credits: Credits from projects that prevent emissions (renewable energy replacing fossil fuel, avoided deforestation REDD+). Currently the majority of VCM supply.
Removal credits: Credits from projects that remove CO₂ from the atmosphere (afforestation, direct air capture, blue carbon, enhanced weathering). Growing market share as corporate net-zero commitments require "removal" credits specifically.
Key standards organisations:
In January 2023, investigative reporting — primarily by The Guardian citing research by academics Grayson Badgley and CarbonPlan — alleged that up to 90% of VERRA's REDD+ Rainforest Protection credits may not represent real emission reductions.
The methodology critique was specific: VERRA's counterfactual baselines (what deforestation would have happened without the project) were systematically over-estimated, meaning projects claimed more credit than they actually delivered.
Several reform efforts emerged:
ICVCM Core Carbon Principles (CCPs): The Integrity Council for Voluntary Carbon Markets published its Core Carbon Principles in March 2023, establishing baseline quality criteria that credits must meet:
The ICVCM's "CCP label" for compliant credits is becoming a de facto quality mark.
SBTi offset rules: Science Based Targets initiative updated guidance specifying that companies cannot use VCM offsets to claim their Scope 3 supply chain emissions are "neutralised" — removing a significant purchaser segment.
A key structural feature of carbon markets: compliance and voluntary prices differ dramatically.
| Market | Credit Type | 2024 Price Range |
|---|---|---|
| EU ETS | EUA | €55–€75 per tCO₂e |
| VCM (forest avoidance) | REDD+ VCU | €3–€12 per tCO₂e |
| VCM (renewable energy) | I-REC/GS | €1–€5 per MWh equivalent |
| VCM (engineered removal) | BECCS, DAC | €200–€1,000 per tCO₂e |
| VCM (nature-based removal) | Soil carbon, blue carbon | €15–€60 per tCO₂e |
The enormous price gap between EU ETS EUAs (~€70) and low-quality voluntary credits (~€5) reflects:
Future convergence: As the EU CRCF raises the quality floor for EU voluntary credits, and as Article 6 corresponding adjustment requirements make cheap credits scarcer, VCM prices for high-quality removal credits are expected to converge closer to compliance prices.
Ireland has historically struggled with EU ETS and Effort Sharing Regulation compliance:
Ireland has extraordinary potential as a voluntary carbon credit seller:
Peatlands: Ireland has more degraded peatland per capita than any EU country. Rewetting one million hectares of degraded bog could generate 1-2 MtCO₂e of removal credits annually under the CRCF. At €40/tonne, this represents €40-80M annually.
Ocean/Blue Carbon: Ireland's extensive exclusive economic zone (EEZ) — one of the largest in Europe — covers significant seagrass meadows and kelp forests with carbon sequestration potential. Blue carbon methodology development could unlock this resource.
Agroforestry: Irish farms adding tree cover generate soil carbon and biomass carbon. Government-supported afforestation combined with carbon credit generation could incentivise Irish farmers to adopt agroforestry practices.
Offshore Geological Storage (BECCS): Ireland's offshore geology has significant CO₂ storage potential. Carbon removal projects using bioenergy with carbon capture (BECCS) could generate permanent removal credits at scale.
The VCM credibility crisis demands a more sophisticated approach to voluntary offsets. My recommendations:
As SBTi and investor standards evolve, avoidance credits ("we didn't cut down this forest") are becoming less acceptable for net-zero claims. Removal credits ("we physically pulled CO₂ out of the atmosphere") are the direction of travel.
ICVCM's Core Carbon Principles labelling program provides a quality filter. As ICVCM approves more programmes and project types, CCP labels will become the minimum bar for credible purchases.
Irish companies purchasing credits from Irish peatland projects or EU-registered projects can demonstrate local impact, support regional development, and typically have higher confidence in MRV quality.
EU CRCF credits (when available from 2025-2026) will be the highest-quality voluntary credits available to EU buyers, with EU regulatory backing. Prioritise CRCF-compliant credits.
Credits with blockchain-anchored MRV — where the verification report hash is immutably recorded on-chain — provide the highest level of provenance transparency. IMPT.io's tokenised credits include this provenance layer.
Despite the 2023 credibility crisis, the business case for high-quality voluntary carbon credit purchases remains strong:
B2B procurement: Supply chain sustainability is increasingly a procurement requirement. Companies with credible net-zero commitments can access premium markets and preferred supplier status.
Consumer markets: Carbon-neutral product labelling, where backed by credible offsets, maintains premium pricing in environmentally conscious consumer segments.
Financing: Green bonds, sustainability-linked loans, and ESG-focused investment increasingly require credible carbon reduction strategies including voluntary offsets.
Pre-compliance: As ETS 2 expands coverage to buildings and transport, companies buying voluntary credits now in the same sectors are building compliance infrastructure ahead of mandatory requirements.
Voluntary and compliance carbon markets serve different but complementary functions. The compliance market — EU ETS and Effort Sharing — creates a mandatory floor of demand and price. The voluntary market allows additional ambition and enables project types not yet covered by compliance frameworks.
Ireland sits at an interesting intersection: struggling to meet compliance targets in agriculture and transport, while possessing extraordinary voluntary carbon generation potential through peatlands, blue carbon, and agricultural sequestration.
The VCM credibility crisis of 2023 was a necessary correction, not an end to voluntary carbon markets. What emerges from it — the ICVCM's Core Carbon Principles, the EU CRCF, blockchain-anchored MRV — is a stronger, more credible voluntary market that genuinely delivers the climate outcomes it claims.
For Irish businesses, the priority is: reduce emissions first, offset residuals last, and when you offset, use high-quality, verifiable credits.
Michael English is Co-Founder & CTO of IMPT.io, a blockchain carbon credit marketplace. He writes on EU and Irish carbon market developments. Based in Clonmel, Co. Tipperary, Ireland.
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