Ecosystem Marketplace (EM) releases the 2023 State of the Voluntary Carbon Market (SOVCM) report, thoroughly analyzing global voluntary carbon credit supply and demand. The report combines interviews and disclosures from key market players with registry data from major carbon credit standards. While retrospective, the report also provides insights into future market trends.

2023 marked a significant year for the market, characterized by more scrutiny due to media coverage of unethical carbon projects. Despite this, the market’s value rose for the fourth consecutive year since 2020, reaching $723 million in 2023. This trend, which began in 2020 and peaked in 2021 with over $2 billion in carbon credits traded, has partially offset declining transaction volumes. 

Overall, 49% of the total VCM value reported to EM since 2005 occurred between 2020 and 2023, signaling significant market growth and resilience. We crunch the EM report, with the following highlights. 

The Big Picture: Volume, Value, and Price Dynamics

In 2023, the voluntary carbon market (VCM) experienced a significant downturn, with total transactions plummeting by 56% to 111 million tons CO2e compared to the previous year. Despite this steep decline in volume, the average price per ton of CO2e only saw a moderate decrease of 11%, reaching $6.53. 

Consequently, the total market value also took a hit, dropping by 61% year-over-year to $723 million. This decline in market activity was primarily attributed to both a reduction in volume and a retreat from the peak carbon prices observed in 2022.

The decrease in the number of market respondents further contributed to the downturn, with some entities merging and others temporarily halting credit sales as they awaited the establishment of stronger integrity and quality norms within the VCM. As a result, the number of respondents providing transaction data decreased from the previous year.

Qualitative feedback from market participants revealed divergent trends among different segments of the market. Remarkably, there was a notable preference among buyers for credits sourced from nature-based and community-focused projects, which offer additional environmental and social co-benefits alongside emissions reductions.

This shift in preference away from carbon removal projects contributed to the decline in overall market volume. However, the impact on market value was less pronounced.

Buyer Behavior: Premiums and Preferences

The EM report further highlighted notable variations in credit prices depending on the buyer type. End users, who directly use carbon credits for emission reduction purposes, paid a premium of 33% over intermediaries, consistent with the previous year. This premium reflects the value end users place on credits for achieving their sustainability goals. 

Notably, transactions involving Energy Efficiency/Fuel Switching and Renewable Energy credits saw the largest premium for end users. This indicates a reliance on intermediaries for project quality assessment.

Among different credit standards, Gold Standard credits commanded the highest premium for end-user sales, amounting to 140%, up from 83% in 2022. This suggests a growing preference among buyers for trusted intermediaries to vet project quality. 

Similarly, Clean Development Mechanism (CDM) and Verified Carbon Standard (VCS) credits also saw substantial increases in premiums for end-user sales. The shift towards intermediaries for project quality assessment is particularly pronounced in CDM transactions, with 73% of sales going to intermediaries in 2023.

These trends may reflect market uncertainty surrounding the transition of CDM projects to future mechanisms under the Paris Agreement. This prompted buyers to rely more on intermediaries for quality assurance. 

Registry Round-Up: Project Registrations and Trends

Analysis of registry data from credit standard registries provides insights into the dynamics of project registrations, issuances, and retirements in the VCM.

Despite challenges, the total number of newly registered projects increased to 694 in 2023, with Household/Community Devices projects leading the growth. Registrations in Forestry and Land Use, Renewable Energy, Agriculture, and Waste Disposal categories also saw year-on-year increases.

In terms of credit issuances, it decreased by 93 MtCO2 e in 2023 compared to 2022. Meanwhile, retirements increased by 2.6 MtCO2 e, indicating a tightening surplus supply of carbon credits. 

Declines in issuances were observed in Chemical Processes/Industrial Manufacturing and Energy Efficiency/Fuel Switching categories, while Household/Community Devices and Transportation projects experienced increases.

Forestry and Land Use, and Chemical Processes/Industrial Manufacturing categories saw the greatest growth in retirements, suggesting a preference for projects with clear carbon removals and emissions reductions. Conversely, retirements of Renewable Energy, Waste Disposal, and Transportation credits decreased.

Total annual credit retirements have remained around 170 MtCO2 e for the past three years, indicating steady fundamental demand. However, there’s potential for increased retirements if corporate buyers can claim credits as offsets against their Scope 3 emissions targets. These trends reflect shifting preferences towards projects with stronger additionality and clear carbon impact within the VCM.

Evolving Project Preferences

The decline in total market value for all categories of VCM credits in 2023 was accompanied by various factors affecting each category. While some categories experienced increases in volume and/or average transaction price, others faced declines. 

Energy Efficiency/Fuel Switching, Agriculture, and Household/Community Devices categories saw volume growth, indicating increased activity. However, Forestry and Land Use and Renewable Energy credits witnessed the largest declines in volume, despite being popular project types.

However, Blue Carbon credit volume plummeted, with prices driven down, particularly for Wetland Restoration/Management projects without ARR activities.

Notably, North American industrial process efficiency credits were transacted at lower prices, contributing to the price decline in the Chemical Processes/Industrial Manufacturing category. These trends illustrate shifting dynamics within different segments of the VCM, reflecting evolving market preferences and supply factors.

Access full copy of the report here.

The post Why The Voluntary Carbon Market Took a Hit in 2023 appeared first on Carbon Credits.

McKinsey & Company released its 2023 ESG Report titled “Accelerating sustainable and inclusive growth for all,” detailing its global efforts to promote sustainability and inclusivity. The report highlights McKinsey’s partnerships with clients, colleagues, and communities to foster societal progress.

Here are the key takeaways from McKinsey’s 2023 progress, focusing on their decarbonization efforts.

Unlocking True Value: McKinsey’s Decarbonization Strategy

The net zero transition is transforming the global economy, creating new markets and threatening others. Leaders must reduce emissions, ensure affordable energy and materials, provide reliable energy systems, and enhance competitiveness.

McKinsey has prioritized sustainability, working with clients for over a decade to decarbonize and build climate resilience. The firm is committed to helping all industries reach net zero by 2050 and meet the Paris Agreement goals. McKinsey uses proprietary tools, thought leadership, talent, and cross-sector collaborations to drive innovation and growth.

The firm partners with entrepreneurs and start-ups to scale technological innovations rapidly. It also works with banks and investors to decarbonize portfolios, and engages with high-emission sectors to reduce emissions and costs. By scaling green ventures and expediting decarbonization, organizations can achieve climate commitments quickly, measuring progress in months rather than decades.

McKinsey faces the climate crisis heads-on by charting its path towards net zero with the following progress at a glance:

McKinsey’s Progress Toward Net Zero 

Slashing Scope 1 and 2 Emissions 

McKinsey has made significant progress towards achieving net zero emissions by addressing Scope 1 and 2 emissions, which account for 2% of their 2019 baseline. In 2023, they reduced absolute Scope 1 and 2 emissions by 56%.

The consulting firm also focused on electrifying their fleet of vehicles, with a remarkable increase in the global use of electric vehicles from 4% in 2019 to 32% by the end of 2023.

The company’s commitment to sustainability extends to making office spaces more sustainable, with 64% of global office space being LEED-certified and 55% being LEED Gold or Platinum certified. Transitioning to renewable electricity has been successful, as McKinsey achieved the goal of sourcing 100% renewable electricity two years ahead of schedule, with 98% procurement aligned with RE100 criteria.

Moreover, McKinsey has conducted comprehensive assessments of water, waste, and biodiversity, taking proactive measures to minimize water consumption and reduce single-use plastics.

Additionally, the firm drives change through local initiatives involving over 1,100 Green Team members. They contribute to reducing the firm’s environmental footprint through various activities like achieving office environmental management system certification, eliminating single-use plastics, and promoting vegetarian options in office cafeterias. 

In summary, cutting Scope 1 and 2 emissions results in these major progress:

Electrifying firm-controlled vehicles: 32% share of EVs
Making office space more sustainable: 64% LEED‑certifed
buildings
Transitioning to renewable electricity: 100% renewable
Driving change through local initiatives: 1,100+ Green Team members

Cutting Scope 3 Emissions

Scope 3 emissions primarily originate from air travel, hotels, and ground transportation. In 2023, Scope 3 business travel emissions were down by 56% per FTE against the 2019 baseline. Efforts are underway to partner with suppliers to further reduce Scope 3 emissions.

Putting a price on emissions:

As of January 1, 2023, McKinsey introduced a global internal carbon fee of $50 per tCO2e on all air travel. The fee is calculated based on flight emissions and will expand to cover all emission categories in 2024.

This fee supports carbon-related procurement, including carbon removals and sustainable aviation fuel (SAF), while also raising colleague awareness of environmental footprints.

Fostering sustainability in aviation:

Collaborative efforts with airlines, fuel producers, and aviation stakeholders aim to make air travel more sustainable. SAF is deemed crucial, with procurement efforts aimed at building the market and learning from experiences.

Initiatives include participation in SAF RFPs and bilateral SAF certificate purchases, resulting in significant emission reductions. A total of 7,500tCO2e was abated through four SAF offtakes, equivalent to 3% of GHG fight emissions. 

With all the decarbonization efforts done and progress achieved by McKinsey, the company managed to reduce its emissions vis-a-vis targets as shown below.

Tackling Residual Emissions with Carbon Credits

Compensating for residual emissions remains a key focus for the multinational consulting company through carbon credits.

Since 2018, they’ve invested in carbon avoidance and removal projects certified by international standards like the Gold Standard and Verified Carbon Standard, alongside Climate, Community & Biodiversity Standards (VCS+CCBS), to offset emissions they can’t yet eliminate.

McKinsey continually assesses its carbon credit project portfolio with third-party due diligence to ensure effectiveness.

In 2023, the company enhanced its approach by diversifying supplier base, refining scoring system based on internal quality criteria, and collaborating with external partners like BeZero, Carbon Direct, and Sylvera for additional feedback.

The sustainability champion also increased its share of carbon removal credits to 50%, primarily investing in nature-based solutions to address climate and biodiversity crises. Additionally, the company made its first technology-based removal purchase to scale biochar technologies.

Ultimately, McKinsey aims to transition to removing 100% of its remaining emissions by 2030. They’ll focus on nature-based solutions and a blended carbon price of around $29/ton.

The post How McKinsey is Charting Its Path to Net Zero: 2023 ESG Report Highlights appeared first on Carbon Credits.

Oxford University’s Carbon Management Program

Launched in December 2022, the Carbon Management Program at the Oxford Institute for Energy Studies (OIES) focuses on the in-depth examination of business strategies aimed at implementing groundbreaking low-carbon technologies essential for transitioning to a net zero world. Specifically, these technologies include carbon capture, utilization, and storage (CCUS) as well as carbon dioxide removal (CDR) solutions, spanning both technological and natural approaches.

The program scrutinizes the role of carbon markets, encompassing both voluntary and regulatory compliance mechanisms, in stimulating investments towards these transformative technologies. The Program’s research activities focus on 3 key thematic areas:

Carbon Capture, Utilization and Storage (CCUS):

The research segment examines the feasibility of CCUS in various sectors like oil & gas, steel, cement, and waste-to-energy. It provides insights into the economic, policy, and regulatory aspects of CCUS adoption.

Additionally, it assesses different policy support methods like tax incentives and carbon pricing to promote CCUS deployment. Comparative analyses with alternative decarbonization solutions in sectors like steel production (e.g., hydrogen adoption) and renewables are also conducted.

Carbon Dioxide Removal (CDR):

COP27 emphasized the importance of taking CO2 out of the air to meet the climate goals outlined in the Paris Agreement. Research in this area looks into various ways to do this, known as Carbon Dioxide Removal (CDR) solutions, to help us transition to cleaner energy and reach those targets.

CDR methods cover a wide range of techniques, so this research zeroes in on the most promising ones like direct air capture (DAC), bioenergy with carbon capture and storage (BECCS), and biochar production. It also explores newer solutions to see how practical and scalable they are.

Carbon Markets:

The third research area of the Program focuses on integrating CCUS and CDR solutions into both voluntary and mandatory carbon markets. Specifically, it offers solutions to significant challenges that have slowed down the progress of CCUS and CDR in voluntary carbon markets and emissions trading systems.

These solutions address various issues, including the need for robust carbon accounting frameworks, methods to ensure the permanence of carbon removal and to manage the risk of leakage or reversal, and assessments of the types of claims companies can make by investing in these solutions.

The University aims to achieve its own net zero carbon goal and biodiversity net gain by 2035, with the following pathway:

“Oxford Net Zero” Initiative

Oxford Net Zero is an interdisciplinary research effort drawing on 15 years of climate neutrality research at the University of Oxford. It is dedicated to monitoring progress, establishing standards, and guiding effective solutions across various fields including climate science, law, policy, economics, clean energy, transportation, land use, food systems, and CDR.

Essential climate change questions that Oxford Net Zero addresses include:

How will carbon dioxide be distributed between the atmosphere, oceans, biosphere and lithosphere?
Where will it be stored, in what forms, how stable will these storage pools be, who will own them and be responsible for maintaining them over the short medium and long terms?
How does net zero policy extend to other greenhouse gases?
How will the social license to generate, emit, capture, transport, and store carbon dioxide evolve over the coming century? 

READ MORE: Oxford Revises Principles for Net Zero Aligned Carbon Offsetting

University of Cambridge Carbon Capture, Storage And Use Research

The University of Cambridge’s Carbon Capture, Storage, and Use (CCSU) research is part of the Energy Transitions@Cambridge initiative, an interdisciplinary research center dedicated to addressing current and future energy challenges. With over 250 academics from 30 departments and faculties, the initiative aims to develop solutions for energy transitions.

The CCSU research focuses on understanding and raising awareness of opportunities and risks associated with CCUS. Areas of focus include chemical looping of solid fuels to produce clean CO2, hydrogasification of coal to methane gas, reforming of methane to hydrogen, and seismological observations of active injection sites. On the use side, research covers manufacturing processes of CO2 and carbonate mineralization.

By bringing together academics and external partners, the university’s research program aims to explore cutting-edge technology themes in carbon capture for large-scale decarbonization.

Cambridge Zero, the University’s ambitious new climate initiative, will generate ideas and innovations to help shape a sustainable future – and equip future generations of leaders with the skills to navigate the global challenges of the coming decades.

The University made history by becoming the first university to adopt a science-based target for emissions reduction, aiming to limit global warming to 1.5 degrees Celsius. It plans to cut greenhouse gas emissions to zero by 2038.

To achieve this, Cambridge is exploring the substitution of gas with alternative heat technologies on a large scale and is progressively transitioning to renewable sources for its power supply. Watch below to learn more about the university’s climate initiative.

  

University Of Edinburgh CCS Research 

The University of Edinburgh’s School of Engineering hosts one of the UK’s largest carbon capture research groups, focusing on carbon dioxide capture through adsorption and membrane separations. This group is part of the Scottish Carbon Capture and Storage (SCCS) Centre, the UK’s largest CCS consortium, which includes over 75 researchers from the University of Edinburgh’s Schools of Geosciences, Engineering, and Chemistry, Heriot-Watt University, and the British Geological Survey.

The Adsorption & Membrane group at the University of Edinburgh specializes in:

Adsorbent Testing and Ranking: Using zero-length column systems to evaluate adsorbents for CO2 capture.
Membrane Testing: Assessing polymers for carbon capture membranes.
Molecular Modelling: Simulating novel nanoporous materials.
Dynamic Process Modelling: Simulating adsorption and membrane-based capture technologies.
Process Integration and Optimization: Enhancing efficiency of capture processes.
Circulating Fluidised Beds: Studying fluid dynamics for improved carbon capture.
Mixed-Matrix Membranes and Carbon Nanotubes: Developing advanced materials for capture applications.

This extensive expertise positions the University of Edinburgh as a leading institution in the research and development of carbon capture technologies.

Zero by 2040

The University has also committed to becoming zero carbon by 2040 as outlined in its Climate Strategy 2016. This strategy employs a comprehensive whole-institution approach to climate change mitigation and adaptation to achieve ambitious targets. 

In alignment with the 2016 Paris Agreement, which aims to reduce global greenhouse gas emissions, the University is committed to supporting Scotland’s and the world’s transition to a low-carbon economy.

Key goals include reducing carbon emissions by 50% per £ million turnover from a 2007/08 baseline and achieving net zero carbon status by 2040. The University plans to achieve these objectives through initiatives in research, learning and teaching, operational changes, responsible investment, and exploring renewable energy opportunities.

Furthermore, the University will use its 5 campuses as “living laboratories” to experiment with and demonstrate innovative ideas that can be implemented elsewhere, fostering a culture of sustainability and practical application in the fight against climate change.

This year, the University is undertaking a major project to achieve carbon neutrality, which is considered the largest of its kind in the UK. This multimillion-pound initiative involves planting more than 2 million trees and restoring at least 855 hectares of peatlands. The project is a crucial part of the University’s goal of 2040 net zero.

Initial regeneration efforts will focus on a 431-hectare site overlooking the Ochil Hills in Stirlingshire and 26 hectares at Rullion Green in the Pentland Hills Regional Park near Edinburgh. Over the next 50 years, the project aims to remove 1 million tonnes of carbon dioxide from the atmosphere, equivalent to the emissions from over 9 million car journeys between Edinburgh and London.

Imperial College London – CCS Research Program

Imperial College’s carbon capture and sequestration (CCS) research program is the largest in the UK, involving over 30 professionals across various departments. They focus on engineering, industrial CCS, subsurface CO2 behavior, and legal and regulatory aspects. The university collaborates with the UK CCS Research Centre, CO2 GeoNet, and the European Energy Research Alliance.

The program has refurbished a pilot carbon capture plant to provide hands-on experience for students and professionals. Built to industry standards, it captures flue gas from a power station and supports research conducted by leading industrial organizations.

Imperial College London is also employing various means to directly curb its GHG emissions. The school’s long-term goal is to be a sustainable and net zero carbon institution by 2040.

ICL’s Transition to Zero Pollution 

The Transition to Zero Pollution initiative is structured around 5 focus themes, each addressing a significant challenge that demands exploration, innovation, and interdisciplinary collaboration:

Emerging Environmental Hazards and Health
Resilient, Regenerative, and Restorative Systems
Sustainable Resources and Zero Waste
Urban Ecosystems: People and Planet
Zero Pollution Mobility

Know more about ICL’s TZP initiative here.

University of Aberdeen’s Carbon Capture Machine 

The University of Aberdeen is at the forefront of carbon capture and utilization research, with experts developing processes and products that not only sequester emissions but also add economic value.

In 2017, the university’s patented CO2 capture and conversion technology led to the establishment of Carbon Capture Machine Ltd (CCM), which became a finalist in the NRG COSIA Carbon XPrize competition, offering a $20 million prize to the winner.

CCM’s technology involves dissolving CO2 flue gas into slightly alkaline water, which is then mixed with a brine source containing dissolved calcium and magnesium ions. This process generates Precipitated Calcium Carbonate (PCC) and Precipitated Magnesium Carbonate (PMC), both of which are nearly insoluble and have various industrial applications.

PCCs are used in industries such as papermaking, plastics, paints, adhesives, and in the development of cement and concrete.

Additionally, sodium chloride (NaCl) is extracted from the final products. These carbon conversion products are carbon negative and in high demand across multiple industries, offering companies opportunities to reduce emissions and create new revenue streams through carbon capture and utilization technology.

Aberdeen’s Net Zero Goal

Same with the other top universities, the University of Aberdeen aims to reach net zero by 2040. As part of this climate commitment, the university became a member of the Global Climate Letter and the One Planet Pledge.

At a glance, here is the university’s carbon emissions, total and by scope, accessible through an online tool.

In addition to enhancing emissions reporting, the university is actively developing a comprehensive net zero strategy. This strategy includes setting targets and exploring pathways across various business functions to achieve carbon neutrality. The publication of this strategy will be available this year.

Conclusion

Leading universities in the UK are advancing carbon capture, utilization, and storage (CCUS) technologies, essential for achieving net zero goals. Oxford, Cambridge, Imperial College London, the University of Edinburgh, and the University of Aberdeen are driving research and implementation strategies that address the technical and economic challenges of CCUS.

Their interdisciplinary programs and climate initiatives integrate these solutions into broader carbon markets and regulatory systems. These universities’ efforts are crucial in transitioning to a sustainable energy future, demonstrating the critical role of academic institutions in global climate action. Through collaboration with industry and government, UK universities are setting the standard for climate action and paving the way for a net zero future.

The post How Top UK Universities Are Reducing Their Carbon Footprint to Reach Net Zero appeared first on Carbon Credits.

Xpansiv voluntary carbon credit trading data saw a significant divergence in prices for nature-based and technology-based carbon credits. The report is from Xpansiv Data and Analytics, which offers a comprehensive database of spot firm and indicative bids, offers, and transaction data.

Xpansiv delivers extensive market data from CBL, the world’s largest spot environmental commodity exchange. It provides daily and historical data on bids, offers, and transactions for carbon credits, compliance and voluntary renewable energy certificates, and Australian Carbon Credit Units (ACCUs) traded on the CBL platform.

The exchange recently secured a major capital raise from Aramco Ventures to further enhance its environmental markets infrastructure solutions.

SEE MORE: Xpansiv Secures Major Investment from Aramco Ventures

The spot data is further enhanced by forward carbon prices from top market intermediaries, along with aggregated registry statistics and ratings from leading providers.

Nature-Based Credits Surge While Energy Sector Prices Drop

Last week saw large blocks of Verified Carbon Standard (VCS) Nature Group Eligibility (N-GEO)-eligible and Climate Action Reserve (CAR) nature credits driving the 20-day moving average of recent-vintage AFOLU (Agriculture, Forestry, and Other Land Use) credits to $12.05, a 125% week-over-week increase. Conversely, a significant block of Asian renewable credits pushed the energy sector average price down by 60% to $0.76.

These blocks accounted for most of the 316,124 metric tons traded on CBL last week. This is composed of 224,730 nature credits and 91,394 energy credits. CME Group’s emissions futures also reflected this trend, trading 584,000 tons through CBL N-GEO and 284,000 via CBL GEO futures contracts.

Specific credit trades on CBL included vintage 2019:

VCS 1477 Katingan credits at $6.00, 
ACR 556 industrial process credits at $2.85, 
ACR 658 credits at $2.30, and 
Vintage 2020 VCS 1753 Indian solar credits at $1.25.

Who Leads the CBL REC Markets?

Last week, a $9.50 offer for 5,000 tons of vintage 2019 VCS Afforestation, Reforestation, and Revegetation (ARR) credits from Uruguay was reposted. New and renewed offers for VCS and Gold Standard renewable energy and REDD+ (Reducing Emissions from Deforestation and Forest Degradation) credits ranged between $1.00 and $2.75.

Project-Specific Credit Offers on CBL

REC trading activity on CBL was light but included larger blocks of bilaterally traded PJM credits settled via the exchange, along with smaller PJM and NEPOOL trades matched on screen.

Virginia Credits: 2024 Virginia credits traded at $0.25, closing the week at $35.25.
New Jersey Solar Credits: Over 1,400 2023 New Jersey solar credits were matched at $207.50, $1.50 higher than the previous week’s close, with an additional 1,500 credits cleared via reported trade.
New Jersey Class 2 Credits: 355 vintage 2024 RECs were matched at $37.50.
NEPOOL Credits: 189 Massachusetts Class 2 non-waste credits were matched at $31.50.

In related news, the White House released new voluntary carbon credit guidelines to promote high-integrity emissions reductions and support nature-based projects and carbon removal technologies.

Xpansiv’s data highlights a stark contrast in the carbon credit market: with nature-based credits experiencing a significant price surge while energy sector credits see a sharp decline. This divergence underscores the growing demand for high-integrity, nature-based solutions in the voluntary carbon market.

READ MORE: Xpansiv’s CBL VCM Saw Significant Block Trades, Xpansiv Connect Launched

As companies strive to meet their net zero targets, understanding these market dynamics will be crucial for making informed investment and sustainability decisions.

The post Nature-Based Carbon Credits Skyrocket as Energy Sector Prices Tumble, Xpansiv Report appeared first on Carbon Credits.