The recent Carbon Forward Conference brought together experts and stakeholders in the carbon market to discuss the evolving landscape of carbon finance, regulations, and market dynamics. We’ve summarized the key takeaways from the event.
Understanding Carbon Market Fundamentals
One session explored how governments are approaching Article 6 cooperation. Topics included demand pools, carbon taxes, voluntary demand, and the role of government in ensuring additionality. The relevance of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) was also debated, with differing opinions regarding its significance.
In the afternoon, discussions shifted to prices and prospects for carbon in existing carbon markets beyond Europe. Topics ranged from the carbon market in China and South Korea to Australian ETS and California's cap and trade system. Market convergence was discussed, with California and New York potentially linking their carbon markets.
The day concluded with a session on the impact of carbon prices on corporations. Where the panel discussed how carbon pricing, when accounted for, can have a big financial impact on businesses. The role of emissions allowances, hedging, and corporate carbon risk exposure was also examined.
Elevating Carbon Market Standards
Another panel featured a debate on market integrity and the need for rising standards. The discussions focused on the Carbon Pricing Course and its outcomes, emphasizing the importance of disclosure and permanence.
Further deliberations on market standards led to considerations of effectiveness in the Integrity council for voluntary carbon market (ICVCM). The environmental community's involvement and corporate accountability were underscored, with a call for more robust standards.
In the afternoon, a session explored the best practices and practical realities of making corporate claims regarding carbon neutrality. Topics included the Sustainable Development Goals (SDGs), the definition of verifiable near-term mitigation, and the role of governments in driving innovation and systemic transformation.
The day concluded with a discussion on the standardization of VCM. The absence of speculative capital in the market and the importance of liquidity were highlighted, with the expectation that the introduction of Carbon Credit Principles (CCP) will enhance the market.
Analyst Showdown: Insights from AlliedOffsets
One of the conference highlights was the Analyst Showdown, featuring insights from Patrick Kuehn, Head of Sales at AlliedOffsets who shared some insights on the near-term VCM supply and demand forecast.
Some of the kew insights and data included:
- New companies are entering the VCM at a rate of 25-40% per year.
- Based on the forecasted Scope 1, 2 and 3 emissions, plus retirement trends of buyers in the market, AlliedOffsets predicts demand for credits could reach up to 1.5 billion tonnes by 2030 for existing corporate buyers.
- Based on the issuance trends of existing and new projects in the market, AlliedOffsets predicts supply for credits could reach up to 600 million tonnes by 2030.
For more information on AlliedOffsets near-term VCM supply and demand forecast, keep an eye out on https://alliedoffsets.com/reports/ for any upcoming releases.
Conclusion: Shaping the Future of Carbon Finance
The Carbon Forward conference brought to light the ongoing developments and challenges in the carbon market. From the intricacies of Article 6 cooperation to discussions on corporate claims, market integrity, and sovereign risks, it's evident that carbon finance is a dynamic and ever-evolving field. The industry's future will likely depend on the collective efforts of governments, corporations, and stakeholders to navigate these complexities and create a more sustainable, transparent, and effective carbon market.
