Expert Forecasts Skyrocketing Prices for CCP-Branded Carbon Credits

"ICVCM's Core Carbon Principle Labels Could Drive Carbon Credit Prices Up by $10, Says Industry Expert"

The Integrity Council for the Voluntary Carbon Market (ICVCM) has recently issued Core Carbon Principle (CCP) labels, a move that could have a significant impact on the price of carbon credits. Simon Jones, the Founder and Managing Director of Emral Carbon, has suggested that this issuance could potentially drive up prices by $10 or more. Jones made these remarks during a webinar panel hosted by the carbon intelligence platform Abatable, where he discussed the implications of CCP labels on the market dynamics.

Drawing parallels with projects under Article 6 of the Paris Agreement, Jones highlighted the premium trading status of cookstove projects with corresponding adjustments. Article 6 of the Paris Agreement establishes mechanisms for countries to transfer credits to other nations while preventing double counting. For example, in November, Ghana issued a corresponding adjustment to a volume of cookstove credits developed by atmosfair, safeguarding them from being double-counted towards the country’s nationally determined contributions. Market experts anticipate that carbon credits labeled with CCPs could command a double-digit premium compared to those without such labels, potentially reshaping the carbon credit market.

Currently, the Voluntary REDD+ Credits Average is at $11.21 per metric ton for V23, while biochar credits typically trade at over $100 per metric ton, with bids reaching up to $145 per metric ton. The Integrity Council for the Voluntary Carbon Market has been rigorously evaluating carbon credit methodologies from various registries based on its CCPs and Assessment Framework. The Council has categorized carbon credits into three assessment types and aims to announce its first CCP labels in the coming months, following an adjustment to the initial timeline set for the end of March.

A webinar hosted by Abatable explored the potential impact of CCP labels and other quality frameworks on the voluntary carbon markets. Around 71% of the market’s total credits are represented by methodologies under assessment by the ICVCM. Abatable’s evaluation suggests that only 6.4% of methodologies are likely to receive a CCP label, primarily focusing on waste management and industrial efficiency projects. A further 36.7% of methodologies have a medium likelihood of receiving a CCP label, with renewable energy and cookstove projects contributing the majority of credits. However, nature-based solutions face challenges in meeting the stringent permanence requirements set by the ICVCM.

Nature-Based Carbon Credits (NGEOs) have faced declining prices over the past two years due to a lack of standardized regulations in carbon markets. Despite their environmental benefits, the demand for NGEOs has diminished, reflecting concerns about the reliability of the system and the absence of clear rules and guidelines. The future of CCP labels and their impact on the market structure remain subjects of ongoing discussion among industry experts.

Coco Chernel, a research associate at Abatable, emphasized the importance of interpreting the ICVCM’s Assessment Framework conservatively when projecting the issuance of CCP labels. Simon Jones of Emral Carbon highlighted the potential for CCP labels to create multiple tiers within the carbon market, emphasizing the need for due diligence on individual projects. He also noted that the timing of ICVCM’s label announcements could have unforeseen impacts on the market dynamics, potentially overlooking high-quality projects that are not immediately prioritized.

In conclusion, while CCP labels aim to enhance transparency and quality assurance in the voluntary carbon market, stakeholders must remain vigilant and conduct thorough assessments to ensure the credibility and integrity of carbon credits. The evolving landscape of carbon pricing and market dynamics will continue to shape the future of carbon trading and sustainability efforts globally.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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