London — The latest round of increased climate commitments from key countries bodes well for demand for greenhouse gas emissions offset credits, the International Emissions Trading Association said late April 23.
The comments followed a US-led virtual climate summit April 22 where US President Joe Biden announced that America will target a 2030 emissions reduction of 50-52% from 2005 levels, compared with the previous 26-28% goal.
"The new pledges represent a strong increase in climate ambition, aimed at meeting the Paris Agreement goal of driving the global economy to net-zero emissions by the middle of the century," IETA said in a statement.
"The steeper government goals are expected to drive a significant increase in both public and private investment in emissions abatement, and this in turn will increase interest and demand for carbon removals and offsets," said the Geneva-based group, which represents a broad cross-section of business and industry sectors.
The latest announcements from governments set the stage for the COP26 United Nations climate talks in Glasgow in November, IETA President and CEO Dirk Forrister said.
"We know where national leaders want to go – so now, the focus must turn to how best to deliver it. Our best hope of meeting these goals will be to ramp up our market cooperation and finance to inspire businesses to invest at scale," he said.
Further details are expected on how the US plans to meet its tougher targets in a national climate strategy to be published later in 2021.
Countries gearing up for COP26
As well as the new US climate goals, Canada's Prime Minister Justin Trudeau announced that the country will increase its 2030 emissions reduction target to 40-45% from 2005 levels, compared with the existing goal of 36%.
Meanwhile, South Korea announced it would halt all funding for new coal-fired power plants abroad and plans to strengthen its 2030 climate goal this year, which currently targets an emissions reduction of 24.4% compared with 2017 levels.
The latest commitments came shortly after the UK government on April 20 announced a strengthened emissions reduction target of 78% from 1990 levels by 2030, compared with its existing target of at least 68%.
Carbon offset credit prices made gains in the first quarter of 2021 against a backdrop of increasing public and private sector ambition to rein in greenhouse gas emissions.
CORSIA-eligible carbon (CEC) credit prices rose to $2.34/mt in March, compared with $0.80/mt in January when S&P Global Platts first launched a daily price assessment.
The CEC assessment relates to core carbon offset credits that are recognized under the UN's Carbon Offsetting and Reduction Scheme for International Aviation, and does not factor in additional project co-benefits, such as biodiversity, improved living standards, employment and educational improvements, which routinely trade at significant premiums.
The CEC contract was assessed at $2.10/mt at the close April 23, according to Platts assessments.