ALLCOT Voluntary Carbon Market Report – September 2017

19th September 2017 by CMIA

After the summer break, activity is beginning to pick up again in the voluntary market, sources report. Buyers are returning to the market and a few deals are being done in the wholesale segment, but bulk prices are under some pressure.

There’s been some interest for Certified Emission Reductions from buyers looking to fill a tender from the UN for more than 170,000 high-quality offsets.

The tender seeks 118,000 regular CERs, together with a further 15,00 Gold Standard CERs, 15,000 Gold Standard CERs that offer co-benefits to women, 15,000 CERs from least developed countries, and 12,200 CERs from Argentina or Colombia.

The CERs cannot be generated by industrial gas or large hydro projects, and cannot come from projects involving fossil fuel power generation. They must also represent emission reductions made after 2014.

CER buyers have been quoting bids as low as €0.30/mt this month in the wholesale market, which one broker says is too low to interest potential sellers.

In the end-user market, average prices for Gold Standard credits remain unchanged compared with mid-August at around $3.20/mt, and VCS standard offsets also flat at around $1.20-1.30/mt.

End-user prices for forestry credits have declined slightly to around $5.00/mt compared with $5.30/mt a month ago. Cookstove offsets are unchanged at around $3.00-3.10/mt. Renewable energy VCS credits are fetching around $1.20/mt, down around 20 cents from August levels.

Buyers who had earlier in the year been focusing on sourcing offsets with strong co-benefits are now concentrating on price, one wholesale market source said.

Bids for Gold Standard offsets in the bulk market are being made as low as $1/mt, compared with the $3.50/mt that most sellers seek to achieve, the source said.

Wholesale VCS offsets are trading at as low as $0.25/mt for hydro, and $0.40/mt for wind projects.

Even forestry projects are feeling the effects of a strong focus on price. One source marketing a project said he had been bid $0.60/mt for forestry offsets, while the offer was seeking at least $3.00-3.50/mt.

A recent study by researchers at Stanford University has found that carbon offsets produce real emissions reductions, countering accusations from some environmental groups that carbon credits are merely “indulgences” that allow companies to continue to pollute.

The study, published by the Ecological Society of America, points out that “64% of [forest offset projects in California’s carbon market] are on land that is or has been actively logged just prior to the project’s start date, indicating that the projects would indeed not have happened without the financial incentive of offsets.”

The study also highlights the co-benefits that offset projects can generate, reporting that 92% of project owners reported at least one type of co-benefit, such as improved water quality and recreation.

Meanwhile, a survey carried out by Imperial College in London found that the vast majority of business leaders believe corporates should actively cut their greenhouse gas footprint, and that most companies that have committed to do so are using carbon offsetting.

Reported by ALLCOT Group