Today is Tuesday, March 12, 2024.
About a month ago, BloombergNEF (BNEF) published "Carbon Credits Face Biggest Test Yet, Could Reach $238/Ton in 2050".
BloombergNEF stands for Bloomberg New Energy Finance and was founded in 2004 in order to provide subscription-based services on the clean energy industry. In 2006, it added analysis and modelling of the carbon markets to its suite of services.
According to the article, "ongoing scrutiny and reputational issues made 2023 a challenging year for the voluntary carbon market". You may recall the series of articles by a British newspaper, followed by developments related to enhancing integrity, such as those lead by ICVCM and VCMI, both also from United Kingdom.
On top, as COP-28 in Dubai did not deliberate on carbon credits several key players of the carbon credit markets are accelerating their advocacy on the topic.
That is why 2024 is seen as "a determining year for the future of the market, tied to whether confidence in carbon credits can be restored".
According to BNEF’s "Long-Term Carbon Offsets Outlook 2024" report, if that is achieved, it "could drive companies to purchase billions of carbon credits annually, elevate prices over $200 per ton and build a market valued at over $1.1 trillion annually by 2050".
Specifically for 2030, BNEF forecasts the following carbon prices per metric tons:
- $20 for high quality offsets
- $93 in California
- $162 at the European Union
Did you know that New York State is introducing a cap-and-invest scheme, that mainland China is focusing on emissions from cement and aluminum sectors and the developments related to direct air capture in the EU? Or that economic recession and inflation may shrink demand for carbon allowances and credits, due to reduced business activity?
The report also mentions that new guidance from the US Commodities Futures Trading Commission (US CFTC) is on the pipeline, among other regulators focusing on strengthening trust in carbon credits. Recall here our post from July 2023 with reference to these US CFTC efforts.
Click at the image below for BNEF's article and here for the specific page with the summary of the "Long-Term Carbon Offsets Outlook 2024" report. Only BNEF clients can access the full report.
