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TOP STORIES

ANALYSIS: Voluntary carbon investors shift credit buying behaviour, but demand rebound still a way away

Voluntary carbon market (VCM) participants expect a substantial demand return, but this could still be years away, with stakeholders at an industry event this week highlighting that investors in the market are now looking more closely at project origination and becoming increasingly selective about the activities they finance.

ANALYSIS: Investment in nature-based, engineered carbon removals should not be zero sum, say stakeholders

Voluntary carbon market (VCM) buyers and developers largely remain committed to investing in both nature-based and engineered carbon removals (CDR), according to a range of experts speaking at the Carbon Unbound conference in New York this week.

AMERICAS

Partial repeal of US IRA tax credits coupled with carbon fee could generate over $2 trillion -report

A partial repeal of climate-related tax credits in the Inflation Reduction Act (IRA), alongside a carbon fee, brings the US closer to achieving its Paris Agreement targets than an expansion of IRA measures alone, and could additionally generate over $2 trillion, according to a working paper modelling climate policy reform to follow the November US elections.

Canadian Indigenous project developer to build Calgary 10 Mt/yr CCS hub with Japanese multinational

A private Calgary-based developer and a global integrated trading company agreed on Friday to develop a carbon capture and storage hub in Alberta with the potential to store up to 10 million tonnes of CO2 per year.

Brazil names managing partners to oversee Amazon forest restoration programme

Brazil’s National Bank for Economic and Social Development (BNDES) and the Ministry of Environment and Climate Change (MMA) last week revealed the entities chosen to spearhead its BRL 450-million ($87.5-mln) Amazon forest restoration programme.

BC, Kwiakah First Nation establish new forest conservation zone supported by carbon credit sales

The province of British Columbia and the Kwiakah First Nation on Friday announced the creation of the Macinuxw Special Forest Management Area, a new conservation and regenerative forestry zone within the southern Great Bear Rainforest.

Traders build net length across North American carbon markets, save for Washington

Both emitters and speculators added to their net holdings of California Carbon Allowances (CCAs) and RGGI Allowances (RGAs), while the latter group continued to shorten their net position in Washington Carbon Allowances (WCAs), according to weekly data from the US Commodity Futures Trading Commission (CFTC).

EMEA

EU’s sweeping corporate due diligence law clears final hurdle

The Council of EU member states voted Friday to adopt the bloc’s Corporate Sustainability Due Diligence Directive (CSDDD), requiring companies with a turnover of more than €450 million to observe human rights and environmental obligations along their entire supply chain or face fines of up to 5% of their global turnover.

Seven EU countries plead for greater use of recycled carbon in chemicals, plastics

A group of seven EU countries are presenting plans on Friday for greater use of recycled materials, biomass, and captured CO2 to replace fossil carbon in the chemical sector, arguing this will help restore the industry’s lost competitiveness.

Euro Markets: EUAs slip on falling gas but secure 7% weekly gain

EU carbon prices eased back for the third successive session, though still locked in an 7% weekly gain, with analysts pointing to a resumed correlation with gas, soft fundamentals, and an overall lack of clear market direction.

UK, European saltmarshes store less carbon than previously thought, researchers find

The carbon sequestration capabilities of saltmarshes in the UK and northwest Europe may have been significantly overestimated compared to global averages, according to new research.

ASIA PACIFIC

Australian agri-tech firm develops beta soil organic carbon measurement models

An Australian agri-tech company has developed beta soil organic carbon measurement models that it says can reduce the reliance on extensive physical soil sampling.

CN Markets: CEAs stable as liquidity improves, price outlook remains blurry

Prices in China’s CO2 allowance market over the past week remained stable with healthier trading volumes, though the continued absence of policy updates is expected to limit the potential for price growth.

CCS project vetoed in Australia over water pollution concerns

A Glencore pilot carbon capture and storage project was knocked back by the Queensland state government Friday over what it said were serious environmental concerns, shutting the door to any further CCS projects in the area.

VOLUNTARY

Nigerian govt agency invests in cookstoves developer to boost production, generate voluntary carbon credit revenue

A Nigerian government agency has invested in a domestic cookstoves manufacturing firm and a carbon offset project developer to increase production of cookstoves and to leverage the credit proceeds, the agency announced Thursday.

Verra consults on proposed changes to voluntary carbon reforestation methodology VM0047

Verra has launched a public consultation on a voluntary carbon methodology for afforestation, reforestation and revegetation, as well as a tweak to a second related programme for the project activity, it announced this week.

Stripe launches fellowship programme to support ideas to boost carbon removal demand

Online payments firm Stripe is launching a fellowship programme aimed at accelerating global demand for carbon removals.

Canadian tech firm to unveil voluntary carbon protocol targeting large-scale battery storage

A Canadian tech firm has launched an initiative to develop a voluntary carbon credit protocol specifically for grid-scale battery storage.

Overcoming the overcast: Climate data firm details how persistent cloud cover hampers tropical forest carbon mapping

Persistent cloud cover poses a substantial challenge for remote sensing technologies that require clear skies to accurately map land covers and measure forest biomass, according to a climate data analytics firm.

BIODIVERSITY (FREE TO READ)

Conservation International to enter nature credit market, screen buyers

Conservation International has announced its intention to participate in the nature and biodiversity credit markets, outlining guardrails it will abide to, including refusing to sell units to fossil fuel companies and firms without zero deforestation targets.

WWF takes legal action against Norway over deep sea mining spat

WWF has announced it will take the Norwegian government to court over its decision to open up areas in the Arctic region for commercial seabed mineral activities.

High integrity forest initiative releases methodology for biodiversity, climate units

The High Integrity Forest (HIFOR) investment initiative backed by the Wildlife Conservation Society (WCS) released on Thursday its methodology to identify and issue units that could fit the nascent biodiversity credit market.

New financing approach key to scaling nature tech market, report says

Nature tech has the potential to reduce costs of biodiversity conservation and support the development of financing mechanisms such as voluntary biodiversity credits, though greater collaboration between private and public sectors is needed to scale the market, a report has said.

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BIOCHAR REPORT

Supercritical’s latest report reveals a 30x surge in biochar supply over the next four years, however 88% of this growth comes from low-quality credits. “Boom or Bust? 2024 Biochar Market Outlook” delves into the pressing challenges buyers face, offering exclusive data and trends from Supercritical’s own marketplace which covers 80% of the market. Discover why high-quality biochar commands premium prices and how savvy buyers secure long-term agreements amidst the scarcity. This essential report equips you with the insights needed to navigate the evolving biochar landscape and make informed decisions in this burgeoning market. Download the report

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Premium job listings

• Head of Carbon Project Development (m/f/d) – Volkswagen ClimatePartner GmbH – Munich
• Environmental Markets Correspondent, Carbon Pulse – Latin America

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CONFERENCES

Carbon Forward North America – June 11-12, Toronto and Online: Join us in the Great White North to hear about the evolving carbon pricing and climate policy landscape in North America. Whether you are an emitter, investor, developer, or a new participant in any of the continent’s carbon markets – compliance or voluntary – Carbon Forward North America offers you the opportunity to gain knowledge on both present and future policy developments and market opportunities. Explore the chance to meet the right people or source the right solutions to help you enhance your business prospects or minimise your risk. Come meet the region’s world-leading carbon market experts, compliance players, government officials, investors, project developers, analysts, brokers, and other stakeholders. To express an interest in speaking or sponsoring, please email michelle@carbon-forward.com

FREE PASSES: We have allocated a limited number of free passes for Carbon Forward North America to attendees representing medium and large companies that currently buy and retire voluntary carbon credits or are looking to do so in the future. If your organisation is an end user of carbon offsets or wants to learn more about offsetting, and is not from the energy or financial sectors, contact us to apply for a free pass. Maximum one per company.

Carbon Forward Expo – October 8-10, London and Online: Save the date! More info coming soon…

Argentina Carbon Forum – June 4-5, Buenos Aires: The Argentina Carbon Forum, a key initiative to strengthen carbon markets in the country, seeks to mobilise local actors and promote intensive climate action. This event opens doors for public-private sector organisations to leverage economic and environmental benefits by financing projects that mitigate climate change. It also offers business visibility, networking and access to valuable information, discussing issues such as markets and negotiations, implementation of emissions trading systems, and decarbonisation strategies. The Argentina Carbon Forum fosters collaboration and the development of innovative solutions for a sustainable future. Register here

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BITE-SIZED UPDATES FROM AROUND THE WORLD

VOLUNTARY

Here it comes – Senior officials from the Biden administration will next Tuesday introduce comprehensive US guidelines for carbon markets, highlighting their support for what they term “high-integrity carbon markets.” This initiative, presented by key figures such as Treasury Secretary Janet Yellen, Agriculture Secretary Tom Vilsack, White House senior climate adviser John Podesta, and Energy Secretary Jennifer Granholm, aims to foster credible carbon offsets to aid global decarbonisation efforts, despite recent criticisms of such projects for failing to deliver promised emissions reductions, Bloomberg reports. The framework, which will be detailed at the Washington DC event, stresses that carbon credits must represent substantial, additional, and permanent reductions in emissions. It will also discourage companies from using these credits as a substitute for directly addressing harder-to-regulate emissions from their supply chains and customers, known as Scope 3. Furthermore, the guidelines will promote transparency in pricing and market operations, but will not explicitly endorse existing voluntary carbon standards, including the Core Carbon Principles developed by the Integrity Council for the Voluntary Carbon Market and Voluntary Carbon Markets Integrity Initiative, the most prominent industry-led governance bodies. A host of agencies have been working on the new US framework since last fall, with the Treasury Department advancing language around the importance of price and market transparency and the Agriculture Department elevating an interest in fair revenue distribution, sources told Bloomberg. This move by the US is seen as a potential catalyst for the growth of the carbon market, which is forecast to expand significantly by 2050. It is expected to attract substantial investment into sustainable projects, particularly in developing countries, by providing a government-backed endorsement of carbon markets. However, critics remain sceptical of the effectiveness of carbon credits, viewing them as potential enablers of greenwashing and insufficient in driving real climate action.

Cautiously optimistic – The Bahamas is poised to significantly boost its economy through the monetisation of its seagrass and mangrove carbon sinks, potentially earning $900 million annually, according to Minister of Economic Affairs Michael Halkitis. Speaking at an investor forum in Grand Bahama, Halkitis expressed a “cautiously optimistic” outlook, backed by the growing demand for blue carbon credits as nations and corporations aim to meet their net zero targets. The government has initiated detailed research on the carbon storage capabilities of Bahamian seagrass meadows, which are among the largest globally. This research aims to establish a basis for valuing and monetising these natural assets through blue carbon credits by the end of the next year. The proceeds from the blue carbon credits are planned to support various national projects including infrastructure for climate resilience, renewable energy, and food security through a public-private partnership, with 49% owned by the Bahamian government. These initiatives are expected to be funded by the National Investment Fund, reinforcing the country’s economic and environmental sustainability. (The Tribune)

INTERNATIONAL

I have a question – The Supervisory Body for Article 6.4 of the Paris Agreement held a virtual meeting this week to discuss methodological questions and party input ahead of the UN intersessional climate conference in Bonn (SB60) in June. The meeting was mainly focused on the establishment of a set of guiding questions on the basis of the call for input from stakeholders on methodologies including on removals. The questions will be used to guide the engagement session with stakeholders and parties at SB60, which takes place June 3-13. The questions can be accessed here. The body has already agreed to a grievance mechanism procedure this year during previous meetings, though tough methodological topics, such as addressing reversal risk for removals, are expected to crop up in Bonn, and later at COP29. Talks collapse in dramatic fashion last year at COP28 on Article 6. Deadlines for two calls for stakeholder input have been extended until the end of May 2024. Stakeholders are invited to provide feedback on four calls for input, including on the revision of CDM methodologies for application under Article 6.4 and the mechanism registry.

We’re concerned – A group of prominent US Democrats has expressed concerns that the upcoming UN COP29 climate summit in Azerbaijan might be influenced by the fossil fuel industry due to the appointment of Mukhtar Babayev, a former oil and gas executive, as the summit’s president-designate. The signatories, including Senators Jeff Merkley, Bernie Sanders, Elizabeth Warren, and Congresswomen Alexandria Ocasio-Cortez and Jan Schakowsky, addressed their concerns to US officials, urging the UN to revise its conflict of interest guidelines to prevent similar situations. They highlighted the risk of the summit being co-opted by the fossil fuel industry, which they regard as a major contributor to the climate crisis. This follows the controversy over the leadership of the previous COP28 summit, which also featured a fossil fuel executive. The letter also mentioned human rights concerns and the geopolitical tensions in Azerbaijan, underscoring the urgency of addressing these issues to ensure the integrity of the climate negotiation process.

EMEA

Helping hand – The European Commission gave its green light on Friday to a €4 billion French aid scheme aimed at reducing carbon emissions in the manufacturing sector. The scheme will support investments in electrification of industrial processes and energy efficiency, in the form of direct grants amounting to up to 30% of the project’s investment costs. Eligible electrification projects must lead to a carbon reduction of at least 40% while energy efficiency projects must lead to a reduction in energy consumption of at least 20%, the Commission said in a statement. For activities covered by the EU ETS, the emissions reduction must go below the relevant ETS benchmarks in force at the time of granting the aid, the EU executive added.

DOA – British PM Rishi Sunak’s call for a snap national election on July 4 is likely to prevent the adoption of his key energy legislation, the Offshore Petroleum Licensing Bill, which mandates annual oil-and-gas licensing rounds in the North Sea. The bill, currently awaiting its final reading in the House of Lords, will likely be shelved as Parliament dissolves later this month for the election. The Conservative Party has argued that the bill would bolster energy security and potentially lower fossil fuel prices by increasing oil and gas supply. However, the viability of new North Sea fields is questionable as resources are declining and development would take years. The bill has faced opposition from climate activists, the government’s Climate Change Committee, and some Conservative members, including former energy minister Chris Skidmore, who resigned over the issue. The government has not commented, and the parliamentary agenda does not include the bill, indicating it will not progress before the election campaign begins. (Bloomberg)

Bricking it – The UK is importing more of its bricks than ever and the carbon cost of each brick is rising, research published in the Guardian has shown. The UK is the number one country in the world for brick importation, according to data from the Massachusetts Institute of Technology’s Observatory of Economic Complexity. More than 500 mln bricks were imported in 2022, leading to carbon emissions of 288,190 tonnes. This represents an all-time high, according to Laurie Parsons, a senior lecturer in human geography at the University of London and author of the research. Between 2020 and 2022, emissions from shipping imported bricks increased by 54%. This rise is attributed to an increasing shift to importing bricks from abroad, and especially from outside Europe after Brexit. The total number of bricks imported from outside the EU was 50 mln in 2022, compared with 3 mln in 2015 – a more than 15-fold increase in seven years. Due to the emissions created while shipping the bricks longer distances, and in some cases the use of more carbon-intensive manufacturing processes, this has led to a higher amount of carbon being released into the atmosphere per brick used.

Thanks but we’re good – The long-term supply of natural gas to Germany and the rest of the EU is secure even without supplies from Russia, the German Institute for Economic Research (DIW) found in an analysis. “Even if gas demand remains high until 2030, it would be possible to do without Russian natural gas,” the researchers said. Demand can be covered by pipeline and LNG imports from other countries and without having to expand Germany’s LNG import infrastructure, they said. “Supply security is therefore no obstacle to further EU sanctions – which so far exclude gas trading – against Russia” amid its ongoing invasion of Ukraine, the DIW said. The analysis considered different supply and demand scenarios and found that a gas shortage due to the loss of Russian supplies is not likely to occur in any of them thanks to trade with alternative suppliers including Norway, the US, Algeria, Nigeria, or Qatar. Gas imports from Russia to the EU have fallen to a quarter of the level seen before the war in Ukraine started in Feb. 2022, the DIW said. However, Russia continues to ship sizeable amounts of LNG to Europe and holds sway over the gas supply of some central and eastern European countries. The EU as a whole relies on Russia for 14% of its gas demand, while the share was 95% for Austria as of winter 2023/24. In a footnote, the DIW said that according to the model, prices in EU countries would only increase moderately, by approximately 10%. The current plans for expanding LNG infrastructure are “strongly oversized”, especially given the long-term perspective of phasing out natural gas use altogether, the DIW added. More import capacity would be needed only in an extreme scenario of high demand and tight supply, especially in Italy and Croatia, it argued. (Clean Energy Wire)

Tax time – Switzerland is undergoing a partial revision of its VAT law, with trade in emissions rights and certificates to be subject to VAT from Jan. 2025, including transactions with foreign counterparties. Sellers of emissions units must make system adjustments and stop showing VAT on invoices from 2025, while buyers must start accounting for VAT from 2025. VAT will thus be applied for the first time to purely domestic transactions. (VAT Update)

ASIA PACIFIC

Accepted – Australian activist capital fund has had its offer to takeover a local carbon project developer accepted, it told the ASX Friday. Sandon Capital announced last month it had entered into a merger of implementation deed for an off-market takeover of unlisted Carbon Conscious Investments for A$0.066. Sandon Capital said in a brief note to shareholders Friday that the minimum acceptance condition has been fulfilled.

Not under my watch – The National Green Tribunal (NGT) in India has sought responses from authorities on a report claiming a 2.33 mln-hectare tree cover loss since 2000, The Print reported. The report cited Global Forest Watch data, highlighting deforestation and carbon emissions from Indian forests. According to the data, India lost 414,000 ha of humid primary forest from 2002 to 2023, accounting for 18% of the total tree cover loss during this period. It added that the tree cover loss in India included both human-caused and natural events such as logging, fires, and storms. From 2013 to 2023, 95% of tree cover loss occurred in natural forests. The NGT determined that the matter indicated a violation of the Forest Conservation Act, 1980, the Air (Prevention and Control of Pollution) Act, and the Environment Protection Act, and consequently, issued notices to the Ministry of Environment, Forest, and Climate Change, the Survey of India (SoI), and the Central Pollution Control Board (CPCB) and listed the matter for further hearing on Aug. 28.

Apply now – Residents in Indonesia’s Sarawak are now eligible to participate in carbon trading, with online applications for licences opening in December. Deputy Minister of Energy and Environmental Sustainability, Datuk Dr. Hazland Abang Hipni, announced that individuals owning at least 100 hectares of private or Native Customary Rights (NCR) land can apply for a carbon trading permit. The initiative allows smaller land parcels to be combined to meet the 100-hectare requirement under certain conditions. Hazland highlighted the opportunity for a new income source through carbon trading, though noted that registered landowners would face certain restrictions, including a prohibition on cutting trees for 30 years in the licensed areas. He encouraged Sarawakians, especially villagers, to engage in this nature-based climate solution to contribute to global climate goals. (InvestSarawak)

AMERICAS

Is it all over? – The chances of passing California’s Senate Bill 1497 (SB 1497), also known as the Polluters Pay Climate Cost Recovery Act of 2024, have dwindled as the chamber missed the May 24 legislative session deadline to move bills out of their chambers of origin. But bill sponsor Caroline Menjivar (D) said SB 1497 could still be called for a vote after the deadline given its designation as an urgency measure, although the designation also means it would require a two-thirds majority vote, E&E reported Friday. If passed, the bill would require California EPA to determine and publish a list of responsible polluting parties within 90 days of the effective date of the Act. Entities penalised would include businesses in the state, or outside that had sufficient contact with the state, that emitted more than 1 bln tonnes of CO2e globally during the period. The money raised would be deposited in the Polluters Pay Climate Fund to support programmes that address climate adaptation and mitigation, as well as cover damage recovery.

Natural opposition – A North American mining company NACCO Natural Resources Corporation (NACCO) filed a petition for review of EPA’s power sector rules in the DC Circuit Court on Wednesday. The company mines and delivers lignite coal as fuel for electricity generation, and also falls under the provisions of the agency’s regulation as it pertains to mining services to natural resources companies. This latest appeal joins a series of challenges consolidated against the rules, in addition to other petitions from 20 Democratic state attorneys general and others requesting the courts to intervene in support of the EPA. Last week, the same court denied a temporary stay of the rules scheduled to be implemented July 8 while the court reviews pending challenges.

Exxon opposition – Norway’s $1.5 trillion sovereign wealth fund has committed to vote against the re-election of director of ExxonMobil Jay Hooley amid ongoing tension concerning shareholder democracy in light of a lawsuit launched by the oil company against two of its climate-focused investor groups, advisory firm Arjuna Capital and Dutch activist organisation Follow This. The Norges Bank Investment Management, one of the top 10 shareholders, said it would vote against Hooley at the company’s annual meeting on May 29 due to concerns around investor rights from the “potential impacts of litigation against shareholders stemming from the submission of a shareholder proposal”. Exxon sued Arjuna and Follow This earlier this year after the groups called on the oil firm to tighten its GHG reduction goals. The shareholders had dropped their resolutions shortly after the case was filed, but the oil firm insisted on moving ahead with the lawsuit reasoning that the groups could return with similar motions in the future. A US federal judge this week dismissed a motion from Arjuna to halt the lawsuit, but granted Follow This’ request for the same citing the absence of jurisdictional authority over the Netherlands-based group. Calpers, the largest public pension plan in the US, has also decided to vote against Hooley citing similar worries surrounding stakeholder rights. (Financial Times)

Climate collaboration – The US and Kenya will collaborate to build low carbon data centres and other green technologies under a new climate and clean energy industrial partnership following Kenyan President William Ruto’s visit to Washington, DC, this week, Semafor reported Friday. The countries will facilitate new investments from the private sector and development banks to convert Kenya’s large supply of clean electricity into climate-friendly exports. The new White House agreement also signals EV supply chains, indicating that Kenya could use its clean power for battery manufacturing as the US attempts to diversify its EV hardware supplies away from China. However, his vision of establishing Kenya as a clean tech powerhouse will test the limits of the country’s delicate grid, and could leave Kenyans with less reliable power and higher electric bills.

INVESTMENT