The voluntary carbon market (VCM) is growing. Consistent accounting practices for carbon offsets is relevant for companies that use carbon offsets to achieve their emission reduction targets, companies who develop carbon offsets and companies who trade or invest in carbon offsets.

There are no accounting standards or IFRS interpretations that directly address the accounting for carbon offsets and related projects. This publication considers how the accounting for carbon offset arrangements by the various counterparties can be addressed using current accounting standards and interpretations as at the date of publication. Note that interpretations are subject to change as the markets, standards and practices evolve.

In the compliance market, companies receive carbon emission allowance/credits from the government or purchase them to meet their compliance requirement on carbon emissions. There are common issues between compliance and voluntary carbon markets on the accounting for transferrable or tradable carbon credits. However, companies who receive carbon emission allowance/credits from the government in the compliance market also need to consider the accounting for the government grant and its emission provision. This publication only considers the accounting for carbon offsets in the voluntary carbon market. See PwC’s publication Emissions trading systems: the opportunities ahead for further details on implications of and accounting for compliance emission trading systems.

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