S&P Global Platts to publish first voluntary carbon credit price assessments

S&P Global Platts is to publish the world's first daily "CORSIA-eligible" carbon credit price assessments form Jan. 4, 2021, Price Group Senior Director Jonty Rushforth said Dec. 16.

The assessments are to provide a transparent view of voluntary carbon markets, which have been embraced by investors and corporations as a tool to finance emission reductions. An example is the International Civil Aviation Organization's CORSIA program, which has created the mechanism to allow airlines to credibly offset their emissions.

"Global carbon markets have moved beyond the national and regional compliance arenas. We're now seeing a significant volume in trade in voluntary carbon credits, which are set to grow exponentially," Rushforth said.

The next UN Conference of the Parties (COP), hosted by the UK in Glasgow in November, 2021, is expected to formalize international trade in carbon credits under the Paris Agreement, he said.

"Carbon pricing will be a key driver of efficiency in global emissions reductions. Our new price assessments are one of the first steps on that journey, providing critical transparency to help market participants understand the value of credits as they plan their carbon neutral strategy," he said.

The assessments, known as the Platts CEC, are to reflect the daily value of CORSIA-eligible carbon credits.

More benchmark voluntary carbon price assessments are planned by Platts, covering a range of projects including removal, reduction and avoidance of greenhouse gas emissions.

The assessments will reflect credits from projects certified by The Gold Standard, Climate Action Reserve (CAR), Verified Carbon Standard (VCS), Architecture for REDD+ Transactions, and American Carbon Registry.

They will reflect the methodologies for the above standards for relevant types of carbon credit projects as specified by the International Civil Aviation Organization.

Under the ICAO, airlines have committed to reducing their carbon footprint through a voluntary period (2021-2023) and a subsequent mandatory reduction period (2024 onwards).

"Despite COVID having weakened eligible credit demand for CORSIA, the number of commitments to reach net zero emissions from businesses and local governments has doubled in less than a year," said Roman Kramarchuk, head of energy scenarios, policy and technology at Platts Analytics.

"Engaging carbon markets to offset emissions credibly is increasingly becoming a strategy adopted by leading entities to help achieve their goals. S&P Global Platts Analytics forecasts strong credit volumes from eligible projects, despite today's tight supply," he said.

Carbon credits are generated by specific projects that avoid, reduce or remove GHG emissions, and are verified and validated by a set of independent standards created by coalitions of NGOs and market participants over the last few decades.

Voluntary carbon markets have evolved and encompass a large range of project types, geographies and standards ranging from renewables in India to forestry in Brazil.