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Market sees Chinese renewable, methane collection carbon credits at discount

Highlights

Up to $2.00/mtCO2e discount heard for China credits

No firm interest seen in Chinese credits

Buyers explicitly asking for non-China credits

  • Author
  • Vandana Sebastian
  • Editor
  • Ankit Rathore
  • Commodity
  • Electric Power Energy Transition Natural Gas Metals
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  • COP27 Energy Transition Environment and Sustainability

The discount for methane collection and renewable energy carbon credits from China, where forestry credits have historically been at a discount compared with other geographies, has become more pronounced over the last few weeks , recent heards reported by S&P Global Commodity Insights show.

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On Sept. 13, Platts heard of VCS-certified Methane Collection (Landfill Gas) credits offered at $5.10/mtCO2e for vintage 2019+ credits from China. On Sept. 12, VCS certified Methane Collection (Landfill Gas) credits of 300,000 mt volume were heard offered at $5.00/mtCO2e for vintage 2019-2020 credits from China. On Sept. 6, VCS certified CORSIA-GEO eligible Methane Collection (Landfill gas) credits of 120,000 mt were heard offered at $4.60/mtCO2e for vintage 2019 credits from China.

These prices were lower than prices reported from other geographies in September. For example, on Sept. 8, GS certified Methane Collection (Landfill gas) credits of 50,000 mt were heard bid at $5.60/mtCO2e and offered at $6.00/mtCO2e for vintage 2020 credits from Turkey.

A similar discount was observed for renewable energy credits, with Platts heard of VCS certified Renewable Energy (Wind) credits offered at $3.25/mtCO2e for vintage 2019-2020 credits from China on Sept.13. This was much lower than the Platts Renewable Energy Current Year assessment on the day at $3.75/mtCO2e.

A developer based in Turkey told S&P Global Sept. 13 that methane collection and renewables credits from China were being seen at a $2.00/mtCO2e discount to similar Turkish credits. A second source, a trader and developer, said "no one was buying or showing firm interest in Chinese credits." The trader said that requests for renewables credits from buyers often explicitly mentioned that the credits should not be sourced from China.

A third source said that Chinese renewables credits were at a 20%-30% discount compared with those from India and Turkey, adding that on some occasions Turkish Gold Standard credits traded at a discount to similar ones from India. At the same time, India and Turkey were at a significant discount to some countries in Southeast Asia like Indonesia where Gold Standard renewables credits were heard trading at $10.00/mtCO2e.

A fourth source, a broker, said that VCS/GS Methane Collection credits from China were at a $0.20-$1.20/mtCO2e discount to those from other geographies, while renewable energy credits from China were at a 5%-10% discount compared with those from India and Turkey, adding that "Market participants prefer other countries, as there can be reputational risks with many cases of child labor reported in Chinese renewables plants".

A fifth source said that they weren't seeing any particular discount for Chinese renewables credits. However, sometimes credits sourced from India can be priced higher than Chinese and Turkish ones, while those from Brazil were higher than India, China and Turkey, the source added.

Platts is part of S&P Global Commodity Insights.

For access to latest carbon credit prices, commentaries and heards, visit PlattsLIVE.