ALLCOT Voluntary Market Report – October 2017

2nd November 2017 by CMIA

In the end-user marketplace, prices have remained fairly steady for most standards and project types, according to market sources. Gold Standard offsets have fallen to around €3.00/mt, while VCS standard offsets in general are averaging around $1.30-1.40/mt.

End-user prices for forestry credits are steady at around $5.00-6.00/mt. Cookstove offsets are unchanged at around $3.00-3.10/mt. Renewable energy VCS credits are fetching around $1.30/mt, up around 10 cents from September levels.

According to UNFCCC data, as of September 30, more than 23.5 million CERs have been voluntarily cancelled. Of this total 89,000 have been cancelled in 2017. The organisation’s Go Climate Neutral Now website, provided in conjunction with Carbon Trade Exchange, reports a total of 150,000 CERs have been voluntarily cancelled, at an average price of $1.21/mt.

The European Union has called on the International Civil Aviation Organisation to limit the use of carbon offsets to those credits that represent reductions made in 2016 and later, according to EU official Peter Vis.

Vis told a conference this month that the EU’s position is that the CORSIA mechanism should only accept those reductions that were generated after the market-based system was itself established.

Some stakeholders are concerned that a more open eligibility would flood the new market with offsets, driving prices down and lowering the incentive for airlines to make emissions cuts in their own operations.

ICAO has yet to agree on what offset standards or project types will be accepted in the CORSIA system.

The UK government published last week its Clean Growth Strategy, in which it holds out the possibility that the country may need to make substantial purchases of international carbon offsets in order to meet its emissions goals.

According to the Strategy document, “the Climate Change Act permits us to use ‘flexibilities’, such as surplus from previous carbon budgets or the purchase of good quality international carbon credits, to meet carbon budgets.”

“We are prepared to use the flexibilities available to us to meet carbon budgets…if this presents better value for UK taxpayers, businesses and domestic consumers.

The report estimates that the country will achieve 93-94% of its targeted emissions cuts in the periods ending in 2027 and 2032. This leaves a balance that could be made up by purchases of offsets, depending on the accepted standards at the time.

The document, available here, also proposes setting up a domestic carbon offset market.

The International Emissions Trading Association has launched a portal on its website to gather stakeholder views on how to set the international emissions trading rules under the Paris Agreement.

UN negotiators are set to resume talks on how to structure international emissions trading under the new climate regime next month in Bonn. Time is running short for countries to agree a set of rules that will govern how countries and the private sector can achieve low-cost reductions through trading, with decisions expected at COP24 in 2018.