Wednesday, 27 November 2024.
If yesterday we analyzed the new OCDE report “Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down”, today we have another report about carbon pricing.
We refer to the “State and Trends of Carbon Pricing: International Carbon Markets 2024” from the World Bank, published last September.
Note that the contents are different from the report “State and Trends of Carbon Pricing 2024” released last May by the same World Bank.
Both reports, though, are part of the World Bank serial publications and this newest analyzes the situation of carbon credit markets and the reasons that currently prevent their expansion.
Considering the important steps related to Article 6 that were taken at COP 29 in Baku, like you already know, the synergy with the upcoming revisions of the Nationally Determined Contributions (NDCs) “represent an opportunity for countries to articulate more clearly the role they see for international carbon markets, so that both sovereign and private buyers and sellers of carbon credits can understand how to leverage carbon markets to advance their climate goals”.
By the way, some countries deposited their updated NDCs during COP 29, such as Brazil (second, ahead of COP 30) and United Arab Emirates (third, after COP 28) while Switzerland deposited its first. Click at the links to access them and compare.
Carbon Credit Markets always likes to stress that, considering that not all countries have abundance of natural resources - “gifts of God”, paraphrasing Azerbaijan's President during COP 29 - carbon credits can be also generated from the so-called technology or engineering based removals.
And as you can see at the picture below, those removals that involve technology have their carbon credits valued about 15 times more than nature based removals and 60 times more than avoidance.
Does it make sense?
Regardless of your reply, according to the report, the greatest appetite for technological activities to mitigate emissions and removals is predominantly concentrated in developed countries.
Click at the image below to download “State and Trends of Carbon Pricing: International Carbon Markets 2024”.
And if you still want more insights about the report, here are some of its topics:
(1) ICVCM’s rulebook to assess the quality of program and methodology is in place; however, its impact on demand mobilization is yet to be seen.
(2) Global efforts to clarify the use case of carbon credits for corporate net zero goals remain unclear and inconsistent.
(3) Host countries are beginning to establish policy frameworks for Article 6 carbon markets, with some also incorporating voluntary carbon markets.
(4) Improved coordination on global capacity building efforts is needed to better support countries to participate in carbon markets.
(5) Clarity on the legal nature of carbon credits is critical to boost market confidence and scale effectively (like we have been reporting).
(6) Developing robust and interoperable carbon market infrastructure is essential for market integrity.
(7) Emerging products could help identify and de-risk carbon market transactions and incentivize investment.
For us at Carbon Credit Markets, each subject above would have a “main owner”: (1) ICVCM or VCMI, (2) SBTI, (3) UN, (4) A6IP, (5) UNDROIT, (6) World Bank and (7) Insurance Sector.
Would you agree? Whats about the BRICS?
Figures, tables and boxes included in the report are also great summaries:
Half-yearly issuances and retirements by project type
Weighted average prices of removal vs avoidance credits
Summary of companies’ emissions performance gap
Role of carbon credits in voluntary corporate climate action
Key elements in carbon market policy frameworks
Range of capacity building services
Legal protections that holders of carbon credits will have if they are recognized or granted property rights
Key challenges to developing robust market infrastructure and potential solutions to address them
Risks in carbon markets and risk mapping for market players
Unmissable content.
