Carbon Credits Rebound, After Wednesday’s Crash; QCI Cites Panic (1)

Report, opinion by Mathew Carr

Dec. 8-9, 2022

Carbon credit prices rebounded Thursday after crashing Wednesday — additional projects may be willing to supply a market that’s becoming more credible.

Quantum Commodity Intelligence assessed the spot Nature Based Offset (NBO) at $3.17/tCO2e, down a whopping 37% Wednesday and at its lowest since February 2021.

“The latest fall, which comes after weeks of prices trending lower, effectively wipes out all the gains seen in the past 18 months on the back of increased investments in the voluntary carbon market.” it said. It cited “panic.”

Carbon Pulse:

Nature-based credits for December 2026 fell 9.5% Wednesday to $16.02 / ton on ICE. Those for Dec. 2024 dropped 8.9%. They extended losses on Thursday.

Lawmakers seem to be curbing potential demand from corporations and countries are failing to tighten their climate targets, which would probably spur demand.

Meanwhile carbon allowances have risen. EU futures for December have gained 12% since the end of October to 89 euros a ton on ICE. They are near their highest since August.

S&P Global: Also on Dec. 7, New Zealand concluded its last carbon allowance auction of the year, with the auction clearing price falling for the first time ever as the market awaits the government’s decision on price setting for 2023.

The auction clearing price for the allowances called New Zealand Units, or NZUs, fell to NZ$79/mtCo2e ($50/mtCo2e) from NZ$85.40/mtCo2e in the September auction, with the revenue generated falling 7.5% to NZ$381 million from a sale of 4.8 million units.

The falls across most of the carbon markets come as new market infrastructure tracking ownership is better understood, which could boost supply in the future as investors gain confidence in the market.

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