Since 2006 Ecosystem Marketplace has been releasing an annual review of the voluntary carbon market. The report is a much-anticipated document because it aggregates transactional data that is self-reported by participants across the globe. Unlike compliance markets where pricing is largely homogenous, the value of voluntary offsets can vary from $0.50 to $50 depending on project type, offset vintage, and location. The findings, therefore, provide a valuable reference point for price points and larger trends shaping the market going forward.
The data indicate there has been a significant uptick in activity. The big drivers are the Paris Agreement effect stimulating voluntary action on the part of companies, a global carbon reduction system for the airline industry, and increased public awareness over the climate impacts of air travel. The reported data volume transacted in 2018 was 98.4 million metric tons. This is the highest total since 2012, which saw significant voluntary offsets generated in the US as a source of early action offset supply for the then newly implemented California compliance market. The US has also maintained its role as the leading jurisdiction for the volume of offsets transacted according to the report.
The main source of this jump has been from the natural climate sector such as Reducing Emissions from Deforestation and forest Degradation (REDD) in developing countries and improved forest management (IFM) domestically. Of these two types, REDD offsets are trading below $2.50 owing largely to the massive volumes they generate which can consistently be in the mid-six figures to low seven figures annually. This explains why the average price for REDD offsets is around $3.00, but for IFM projects which generate lower per project volumes, the average offset price for 2017 and 2018 is around $8.75. Such pricing, combined with increased interest in natural climate solutions, are encouraging signs for the important role forest landowners, ranchers, and farmers can play in generating revenue through adopting practices that reduce greenhouse gas emissions.
Recent Comments