E - UNFCCC Article 6 and ITMOs Offsets

Carbon credit prices Jan-Nov 2021 - Platt

Number of offsets sold has doubled in past two years

Andrea Bonzanni, IETA: “There are different views on where the market will head to, and this is normal...The Glasgow deal “is a starting point for the private sector to keep delivering high-quality credits and functioning market.”

Andrea Bonzanni, IETA’s international policy director, believes it will still be possible for a company to issue credits claiming emission cuts without authorization.

Banks and other investors will be racing to find impactful and creditworthy businesses in which to invest climate capital. This could lead to the rapid scaling up of climate-focused businesses, and as a result a wholesale transformation of the competitive landscape in ‘green’ technologies and manufacturing.

By forcing Parties to “revisit” their NDCs before next year’s COP, the Pact will induce some countries to reconsider their targets and redraw their emissions pathways. And this will cascade down to business, likely pushing many organizations to accelerate their own decarbonization plans.

By laying out the “45% by 2030” emissions target in black and white, the Pact has set a clear benchmark for evaluating the credibility of businesses’ climate transition plans. Those that fail to integrate this target could find themselves the target of climate activists, investors, and even legislators.

Henrik Hasselknippe: “Markets can handle multiple standards...That’s something that we see in many markets.”

Lambert Schneider, research coordinator on international carbon policy at the Oeko-Institut: “The voluntary market is really booming, but at the same time you have this integrity problem.” Although the COP26 agreement doesn’t directly affect voluntary markets, its rules may “spill over into the system, setting the bar higher.”

Paula VanLaningham, head of carbon pricing, S&P Global Platts: "Sunday's adoption of Article 6 has opened the door for billions of dollars of investment to flood into the Voluntary Carbon Markets over the next several years. Crucially, Sunday's agreement around Article 6 creates a system that will avoid the potential double-counting of offset emissions between countries, which will help to lend much-needed credibility to the emissions markets in the coming years."

Paula VanLaningham, head of carbon pricing, S&P Global Platts: "the new scheme also empowers those countries – many in the Global South – who produce the bulk of the credits on the carbon market, to make their own decisions about which credits they offer for sale on the international market. It also provides them with the opportunity to meet their own national targets with the credits generated by projects within their own borders."

Paula VanLaningham, head of carbon pricing, S&P Global Platts: "The decision to limit the number of older Clean Development Mechanism Credits that can be claimed in national targets will lend further credibility to these markets and will, critically, increase the overall price of carbon offsetting, thereby encouraging additional emissions reductions.”

Plans under Article 6 “could lower the cost of implementing nationally-determined contributions, the emissions that countries have pledged to reduce to play their part.”

Poorer countries could benefit financially from more transparent offset trading.

Taskforce on Scaling the Voluntary Carbon Markets: The value of the VCM market is now more than $1 billion and forecast to increase fifteen-fold by 2030.