Platts Blue Carbon credit price at record high amid strong demand, limited supply for DBC-1

The Platts Blue Carbon credit price assessment jumped to its highest level since Platts launched the assessment in March 2024 on Aug. 28, driven by robust demand for the limited pool of credits coming from the Delta Blue Carbon-1 project in Pakistan -- the main blue carbon project with active credit issuances in the secondary market.

Platts, part of S&P Global Energy, assessed the current year Blue Carbon price at $29.30/mtCO2e on Aug. 28, up $1.3/mtCO2e day over day. The Platts-assessed Blue Carbon prices logged a 15-month high in early July, followed by a dip to a five-month low on Aug. 1. But they have made a strong recovery, gaining 14.9% since then.

"The demand for Nature-based credits has improved significantly in the last few weeks, especially Blue Carbon and REDD+ credits. It could be that a buyer is being aggressive to complete its portfolio," an India-based carbon consultant said.

Another India-based developer/trader echoed the sentiment, saying an uptick in demand is evident, primarily for removal credits.

Blue carbon projects are widely known to generate carbon credits from activities that restore or conserve coastal and marine ecosystems and are perceived to be relatively higher on the environmental integrity scale compared to other types of carbon projects.

Platts saw consistent bids reported at and above $29/mtCO2e through the week that started Aug. 25. A trade was heard on Aug. 27 at $30.50/mtCO2e, executed on Aug. 26, for 5,000 mt.

A US-based carbon trader commenting on the elevated trade and bid levels for Blue Carbon Credits noted that for very specific projects and vintages -- Vintage-21 Delta Blue Carbon and Vintage-2020 Katingan -- there appears to be increased demand, and available supply seems a little tight.

"Just like Katingan, people know it [DBC], have accepted it, and it's one of the few that seems to have avoided much in the way of controversy," the source said, commenting on the improved demand for the Delta Blue Carbon credits.

However, amidst the rally in prices, some participants expressed skepticism and observed that there would be minimal purchasing interest overall at such elevated levels. Furthermore, once the aggressive buying subsides, it is anticipated that prices will soften.

"People won't buy DBC at $30+. Such levels take away a lot of potential buyers from the market," an Oceania-based carbon trader said.

Platts reported earlier that DBC-1 credits comprise a mix of avoidance and removal credits under Verra's VM0033 methodology, which has fueled doubts about the justification for premium pricing, several market sources told Platts.

DBC-1 prices high amid limited supply

Although there are other Blue Carbon projects being set up globally, DBC-1's limited issuance supply in the secondary market has caused buyers to rush toward credits from the project.

"There is a project being set up in Senegal, a few in India, and there's also the Myanmar project, but these are all in either registration or validation stages, so issuances for Blue Carbon may be limited to DBC-1 for a while," said a second India-based source.

The elevated cost of setting up removals projects overall is high but for Blue Carbon in particular developers have told Platts earlier they would not be in a position to offer lower than levels that don't cover the cost of the project.

"Given the challenges and costs, any offer below $25/mtCO2e for DBC-1 seems unrealistic," said the India-based source.