In this report
- Voluntary: Allcot pivots business model following cash squeeze, while Africa’s VCM receives flood of investment during inaugural summit
- Compliance: California cap-and-trade programme sees record high auction settlement, as Brazil’s carbon trading bill makes its way through Congress
- Finance: U.S. startup reportedly sees valuation plummet by 95%, while Asia-Pacific countries advance on Article 6 partnerships
Voluntary: Allcot pivots business model following cash squeeze, while Africa’s VCM receives flood of investment during inaugural summit
One of the oldest project developers and traders in the carbon market, Allcot, is pivoting towards consultancy services and seeking project partners after a drastic drop in carbon credit revenue.
Hundreds of millions of dollars were pledged in Kenya to support Africa’s VCM on the first day of the first African Climate Summit, established to kick start a flood of climate change investment into the continent. During the event, Nairobi-based blockchain carbon credit platform CYNK launched with a futures transaction of more than two million credits sourced from one of its founding partners.
Integrity Global Partners (IGP) has formed strategic partnerships with project developer Energy Changes and trading firm Gaia Environment to finance restoration and conservation projects, with a primary focus on Africa.
Corporates seem to be shying away from the VCM since the release of the ICVCM’s framework for assessing methodologies eligible for its Core Carbon Principle (CCP) integrity labelling, with retirements and demand for REDD avoided deforestation dropping sharply in August.
Acorn, a unit of Dutch bank Rabobank, will invest some $50 million in Asian agroforestry projects to be undertaken by South Korea-based IGO Asian Forest Cooperation Organization (AFoCo). The initiative expects to generate an undisclosed number of carbon credits in countries including Cambodia and Vietnam.
Australia-based Atec, the Dutch FairClimateDund, and Modern Energy Cooking Services in the UK are piloting a project in Bangladesh and Cambodia that lets households get access to clean cooking services while earning money through a carbon credit revenue sharing system using Atec’s IoT technology.
Interest in Japan’s domestic J-Credit scheme is continuing to increase, with trading house Marubeni and oil and gas firm Inpex separately announcing partnerships with local governments to develop forest carbon projects.
Japan’s Nomura and Mitsui have invested an undisclosed amount in New Forests’ Tropical Asia Forest Fund 2. The two companies last year bought up the Sydney-based forest management firm.
The Assam state government in India has teamed up with FairClimateFund India, tech company Integra Micro Systems, agricultural equipment maker ESCO Global, and NGO Sanjog to roll out a programme that lets smallholders earn carbon credits from more efficient farming.
Puro.earth and Carbonfuture announced a partnership that will enable projects certified by the Finland-based firm access to a large marketplace operated by the latter.
Bolivian biochar producer Exomad Green aims to remove 200,000 tonnes of CO2 a year from next year after gaining certification under the Puro.earth carbon crediting standard.
Paraguayan Senator Basilio Nunez introduced a carbon credit bill that he says has greater support than previous legislation that would regulate the voluntary market. The bill will ultimately replace S-2311378, an older proposal put forth in March by a group of Paraguay senators to establish a regulatory framework to define the ownership of carbon credits generated in the South American country.
In Guyana, President Irfaan Ali targeted US$70/tonne for REDD+ sales during a meeting with former UK prime minister Tony Blair and separately rebuffed questions on carbon credit integrity.
Compliance: California cap-and-trade programme sees record high auction settlement, as Brazil’s carbon trading bill makes its way through Congress
The August WCI California-Quebec current vintage carbon auction settled at its highest point of all time for $35.20 on Aug. 16, selling all of the nearly 55.8 million current vintage allowances on offer. The WCI advance auction clearing price also achieved a new peak of $34.16 and sold all of the nearly 7.6 million V26 allowances on offer.
In Brazil, President Luiz Inacio Lula da Silva's draft emissions trading system (ETS) proposal was incorporated into a newly revised carbon trading bill, PL412/2022. However, a coalition of Amazon states penned a letter calling for the proposal to incorporate subnational REDD+ programmes. The Senate Environmental Committee could vote on PL412/2022 later this month.
The 11 RGGI member states announced they will host a public meeting on Sep. 26 to discuss and seek feedback on the third programme review thus far, alongside results of their electricity sector analysis for reforming the power sector carbon market.
The Quebec government released draft regulations to amend its compliance offset protocols for the destruction of halocarbons, after finding that evolving processes have rendered some of the activities non-additional and ineligible for credit generation in the joint California-Quebec carbon market.
European power emissions are set to fall by more than a fifth this year as gas-fired generation has returned to profitability in the region, while an uptick in hydro generation will also help depress demand for EUAs over the coming month, according to analysts.
Power generation across EU countries already fell to its lowest level in the first six months of 2023, as a 5% drop in overall consumption year-on-year and strong renewable output led to a 23% collapse in coal and 13% fall in gas burn.
Veteran EU carbon analyst Lawson Steele has revised down his forecast for EUA prices out to 2030 in a report exclusively seen by Carbon Pulse and is now anticipating a much slower growth trajectory out to €200 by the end of the decade.
Poland’s largest utility PGE plans to spin off all its coal capacity by the end of the decade, heavily invest in wind and nuclear, and reach climate neutrality by the 2040.
Trading volumes have increased in China’s national market recently as Dec. 31, the first ETS compliance deadline for two years, is slowly approaching. The CEA price hit a year-to-date high in late August at 73.20 yuan but have come down a little since.
Malaysia is considering introducing a carbon tax similar to that introduced by neighbouring Singapore. A Sarawak state official told local media that the federal government has engaged the World Bank to study a tax to drive emissions cuts while also allowing emitters to use some carbon credits towards their obligations.
While uncertainty remains over the use of forestry in the New Zealand ETS, seafood company Sealord has invested NZ$10 million in a forest carbon initiative from Maori fishery firm Te Arawa.
Taiwan is planning to introduce a domestic carbon levy, but that is now on track to be delayed until 2025, according to local media reports.
Finance: U.S. startup reportedly sees valuation plummet by 95%, while Asia-Pacific countries advance on Article 6 partnerships
Indigo Ag, a U.S.-headquartered agriculture technology startup focused on voluntary carbon, has seen its valuation plummet by nearly 95% to around $200 million from at least $2-3 billion just a few years ago, according to a media report.
Vietnam and Singapore have signed an LoI to progress in Article 6 partnership, on which they signed an MoU last year, making it among the frontrunners of Asian bilateral arrangements to be ready to start generating ITMOs.
South Korea is eager to get domestic companies involved in the Article 6 projects under the Paris Agreement and has launched a programme under which it will co-fund project investments to help drive greater participation.
Meanwhile, Korea Forest service has announced it expects to sign an MoU with Laos on the implementation of REDD+ projects before the end of the year, as part of the East Asian nation’s plan to access forestry projects abroad to meet its Paris Agreement commitments.
U.S. states can now draw on $350 million in grants from the Inflation Reduction Act (IRA) to monitor and reduce methane emissions from their oil and gas operations.
The Center for Law, Energy and the Environment at the University of California, Berkeley, is leading a coalition currently in award negotiations with the Department of Energy (DOE) for a Direct Air Capture (DAC) hub in California’s San Joaquin Valley. This marks the third DAC hub to publicly acknowledge funding from the DOE as part of the department’s total of $3.5 billion to be invested in four regional DAC hubs over the next five years.
Thirteen entities will receive a total of $1.3 million from the DOE for commercialisation programmes that support DAC.
The United States Agency for International Development (USAID) will spend $2 million over the next three years on the Planeta programme to help Mozambique develop nature-based carbon credit projects. The programme, implemented by Nairobi-based investment firm CrossBoundary, will support 10 planned projects, giving advisory services to offset developers and helping link these entities with international carbon markets.
Amid recent calls for the introduction of a European carbon central bank to help regulate the EU ETS beyond 2030, as well as integrate removals into the mechanism, stakeholders have raised concerns both on the feasibility as well the necessity of introducing such a centralised regulatory body.
Cameroon’s President Paul Biya has hinted at the possibility of introducing a carbon tax as part of the country’s 2024 Finance Act.
The UK government has committed £16 million to restoring peatland across 12 projects in England to help boost the nation’s carbon sink.
New Zealand will release a strategy paper on buying ITMOs in the near future, according to Climate Change Minister James Shaw. The country expects to have to buy around 100 million credits to meet its Paris goal but has yet to detail how it will go about doing it.
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.