Voluntary carbon offset prices up 26% in 2008
Posted by Jos Cozijnsen in VoluntaryLONDON, Sept 16 (Reuters) - Prices for voluntary carbon emission credits, which allow companies and individuals to offset their carbon footprints, have risen by a quarter this year, market analysts said on Tuesday. The average price for verified emission reduction credits (VERs) jumped by 26 percent to $6.30 per tonne of carbon dioxide (CO2), up from an average of $5.00 in 2007, carbon market analysts New Carbon Finance said in a statement (see here for report).
Accusations of poor quality have frequently plagued the voluntary carbon market, which is booming nevertheless, as buyers try to cut their contribution to global warming.
NCF's Voluntary Carbon Index tracked transactions of some 3 million VERs in July and August, worth $18.9 million. NCF in May said the entire market more than tripled to $331 million in 2007.
"Confirming trends that were initiated in 2007, we're seeing significant price separation among credits verified to the different standards," said NCF analyst Thomas Marcello, referring to differing standards of VER certification.
Gold Standard certified VERs priced around $15.80 a tonne, while California Climate Action Registry (CCAR) credits commanded prices averaging $10.80.
VERs certified under the Voluntary Carbon Standard (VCS) averaged $7.30 while credits issued over the Chicago Climate Exchange (CCX) traded around $3.90 per tonne <0#CCXCFIY:>. CCX credits have since fallen, closing at $2.50 a tonne on Monday.
VER credits relating to the capture of methane, a potent greenhouse gas, accounted for the majority of transactions and command the highest prices ($7.30/t), NCF said.
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More interesting to me is the variation in prices depending on the method of verification. What is the reasoning behind such vast differences in prices- $15.80 a tonne to $2.50 a tonne? I undertand the debate around the verification protocols, but can that really account for this big of price disparity?
Thanks, I can accept and understand the variation in prices. On the compliance market a ton is a ton, to facilitate a liquid market. On the voluntary market the value and the specifics of the whole project matter. You do not need to trade a VER often, only once, to offset and to communicate about the project. So, it is not the difference of the protocols but the different situation the verificator finds.