Cumulative global service-sector spending on carbon capture and storage (CCS) developments over the next three years is likely to exceed $50 billion, according to Lein Mann Hansen, senior analyst at Rystad Energy in Oslo. Carbon capture is big business already and is set for further growth. There is some evidence that improvements in carbon capture technology are being supported by carbon credits. “The longer the current methodologies and standards are in use, the greater the volume of credits they will generate.” Capture, storage spending As well as improving market governance and standards, the oversupply of poor quality, historic credits will need addressing. Such prices “reflect a combination of historically weak standards of integrity and an over-supply relative to demand,” Trove says. That compares with a current volume weighted average of around $5-$6. The higher the carbon price needed to justify the investment in a project, the more likely it is that the project is truly additional and could only happen with the funding from the carbon credits.”Īccording to Trove, voluntary carbon credit prices need to increase significantly to deliver the needed climate benefit, with an estimated 2030 range of $20-$50 per tonne. In those cases, Trove says, a project “cannot be said to have reduced emissions beyond those which would have otherwise occurred. Trove Research argues that the greatest threat to a carbon credit’s environmental integrity is the risk of “non-additionality”, or the risk that a project might have happened even without the revenue from selling the credits. “We are getting towards a use-by date.” Higher Prices Needed He is encouraged by the progress made at COP 26 and its strong statement on the use of vintages.

He questions whether their use to offset current emission can have any beneficial effect.Ĭarbon markets in some cases have a positive impact and in others are an excuse for greenwashing, DeNoon says. That is over-optimistic, according to Trove Research, which predicts a 2030 voluntary market size of between $10 billion and $40 billion.Ībout 60% to 65% of carbon credits are “vintage” issues that date back years, says Paul DeNoon, director of carbon markets and policy at the Coalition for Rainforest Nations in New York. It aims to tackle the problem posed by the fact that some carbon-intensive industries, for example mining, are essential suppliers of raw materials needed in energy transition.įormer Bank of England governor Mark Carney said in 2020 that the carbon offset market could be worth $100 billion by 2030. The concept of carbon offsetting was introduced by the Kyoto Protocol in 1997. “I’d like to think that we are close” to achieving that switch, he says. There is no way for the world to “offset its way out of climate change”.Ĭarbon-neutrality claims, Broekhoff argues, need to be replaced by “contribution claims.” These need to go further than the “cheap, low-hanging fruit” of planting trees, and embrace strategies such as high-value investments in technology, and active political lobbying to move green policy forward. Progress can be through strategies such as high-value investments in technology, and active political lobbying to move green policy forward, he says. There is no way to be sure that they are paying for carbon reduction over and above what had already been committed to.įor Broekhoff, the concept of corporate carbon neutrality “may have reached its expiry date.” The more important question, he says, is to what extent companies are contributing to global net zero, a target for 2050 which starts from the record-high emissions seen in 2020. The danger, Broekhoff says, is that companies are using carbon credits for projects that would have been implemented anyway. If this can be done through carbon credits, then the box can be ticked and the claim can be made. But now, he says, companies are looking at how emissions can be reduced throughout their value chains.Ī core problem is the search for carbon neutrality at corporate level. Previously, offset of emissions was the main way for companies to make carbon-neutral claims. There is now a “paradigm shift” occurring in corporate carbon-reduction strategies, says Derik Broekhoff, senior scientist at the Stockholm Environment Institute in Seattle. The use of “vintage” carbon credits which may be years old as a way to offset current carbon emissions shows its time for corporate citizens to get real on helping to create a net zero world, experts say.

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