Anticipation builds over issuance of Global Carbon Council credits

As the new Qatar-based Global Carbon Council is expected to issue more credit in the coming months, market participants have been speculating the likely prices of these GCC-certified credits, sources S&P Global Platts spoke with over the past week said.

As of Nov. 2, 133,667 GCC-certified credits have been issued and these were by Alibey Wind Power Plant in Turkey. Meanwhile, approximately 20,000 mtCO2e hydro credits are expected to be issued to Turkey's Ova Hydro Power Plant by the end of this year.

The GCC said that further issuances have been delayed because of constraints due to a low number of GCC approved verifiers.

"Project and emission reduction verifiers are occupied and developers are not getting dates. GCC is working to increase the number of verifiers. Issuance is taking time as we are being stringent on issuing credits and associated labels," Kishor Rajhansa, Chief Operations Officer, Global Carbon Council, told Platts.

Market participants are gearing up for spot trading by setting indicative prices for credits.

"The GCC credits will be a real game changer," a trader told Platts, adding that buyers were interested and are providing indicative prices of around $4/mtCO2e for 2021 vintage projects, including hydro credits.

Earlier, Platts had heard offers of $6.70/mtCO2e for GCC-certified credits, however, participants deemed these too high. There is also a lack of clarity on the credit inventory as only one project has been certified so far.

Some developers have entered into forward delivery contracts with buyers. GTE Carbon, the developer of the Alibey Wind Power Project, estimates the current value of GCC credits to be approximately $2-$3/mtCO2e. When it signed the forward delivery contract last year, prices in the voluntary carbon market were much lower.

"At the time of signing the contract, the price we agreed on was slightly higher than the Gold Standard price in the market," M. Kemal Demirkol, Managing Director, GTE Carbon, said.

Last year, prices of renewable energy credits of even newer vintages were under a dollar. The Platts CEC assessment, which reflects CORSIA-eligible credits of vintages 2016+, stood at 80 cents/mtCO2e when it was launched on Jan. 1. Platts CEC was assessed at $7.05/mtCO2e Nov. 1.

A bulk of CORSIA-eligible credits are from the renewable energy segment. However, the CORSIA eligibility of a renewable energy credit adds substantially to its market value.

"We are developing around 10 more renewable energy projects for GCC at the moment. We are intending to submit new projects. Total volume [from our projects] is expected to be around 2 million-3 million mtCO2e/year. By end of this year, expected volume to be issued is around 1 million mtCO2e," Demirkol said. "We see a lot of demand from the market. Both end-users and traders/brokers are approaching us to buy GCC credits."

Several Indian developers have been registering projects under the GCC, but said it was too early to comment on prospective prices.

"Only one project's credits have been issued so far. We would need credits from at least 5-10 projects to understand what prices of GCC credits look like," a developer told Platts.

When contacted, most industry sources said they expect GCC credits to trade at a discount compared with GS and Verra-certified credits because of the concerns raised by other standards on additionality of the projects certified -- a stance strongly refuted by the GCC.

It, however, expects strong demand for the projects.

"We don't see any reason why GCC credits should be priced at a discount. We have maintained our stand about additionality from the very beginning. We refuse to make blanket judgments regarding what project is additional and what is not. When a non-additional project comes in, we ensure it doesn't get certified," Rajhansa said. "There is demand for GCC projects for good reason. The market needs good quality offsets."