25 March, 2021
The rise of climate change as a focus of corporate agendas has led to a huge increase in interest in high-quality carbon offsets.
The market for voluntary carbon offsets has grown quickly on this basis, with an increase of over 1200% in credits retired between 2010 and 2020 globally. There are several different types of offsetting project, including tree planting, renewable energy and carbon capture. The carbon offset market resembles a commodity market in several ways, since the outcome of any type of offset is the same, regardless of how they are produced, or where – one tonne of carbon dioxide equivalent removed from the atmosphere (or not produced in the first place).
Despite this, businesses have an interest in offset projects that are geographically and thematically related to their business. After all, to offset emissions, a business is responsible for producing, in the truest sense, the removal of emissions should be as close as possible to the source.
As a result, while the voluntary offset market is in good supply globally, in countries such as the UK that have not typically been hot-spots for offset project development but where there is a large and growing number of businesses looking to offset residual emissions, demand has far exceeded supply. This has led to periods when no certified UK-based offsets have been available, and a significant increase in the price of these offset credits. A bit like trying to get tickets for Glastonbury, only less well organised.
While there is concern that prices will continue to rise, there are also big opportunities for new entrants to the offset markets and Mark Carney’s Taskforce on Scaling Voluntary Carbon Markets has published its blueprint on creating a large-scale, transparent carbon credit trading market. But for now, it’s fingers on buzzers as we all compete for the same few high-quality UK offsets.
By Patrick Bapty