LowEmissionAsphalt-136pg-WhitePaper-May2023

P a g e | 21 The state of the Voluntary Carbon Market (VCM) is in transition. While latest trends in the oldest credit types have encountered some concerns, the appetite for credits continues to grow, especially in light of increased regulatory pressures mounting such as the FHWA Climate Challenge. VCM’s continued their rapid growth in 2021, to over $1 billion in traded credits. 39 In 2021, avoided deforestation (REDD) 40 and grid-scale renewable energy (REs) still accounted for 77% of voluntary carbon market issuances (Figures 2 | 3) and 79% of retirements. 41 However, both REDD and REs have encountered both qualitative and quantitative issues as eluded. REDDs, since they generally are found in remote regions of underdeveloped countries, have proven difficult to audit. And REs have proven challenging to quantify due to unreliable performance. Many solar and windfarm deployments are falling well short of expected capacity. In some cases, they produce less than 10% of underwritten output. However, these early-stage hiccups and outright mistakes should be viewed not as an entrenched hindrance as they merely reflect the strong demand from intractable pollutive industries for offsets. Infrastructure credits closer to home and project inclusive to directly address local emissions are hence becoming more and more aggressively sought after. The transportation construction industry can benefit from these high demand-pull trends by focusing on what techniques or technologies in paving are becoming available that can be levered systemically within the transportation system. Carbon markets have two functions. One, to drive capital to credible carbon reduction and carbon removal efforts and technologies; and two, to provide industries with accessible options whether systematic or external to meet both desired and mandated overall lower product or process carbon output. The transition to higher quality, more systematic impact credits will be both critical and advantageous for paving construction and the transportation industry writ large to embrace. 39 Ecosystem Marketplace: Voluntary Carbon Market 2021 in Review and 2022 Outlook . 40 REDD – Reducing Emissions from Deforestation and Degradation. 41 www.carbon-direct.com .