March 12, 2024 — Opinion by Mathew Carr (Not investment advice. Do your own research.)
I’ve long said carbon credits are a screaming buy and sellers are not getting a fair share of the carbon-cutting money.
At some point I’ll be right?!
This update last month by Oxford Uni (no less) of offsetting guidelines will add to the increasing confidence of buyers (CarrZee preliminary view).
If a company is not buying credits for its own climate mitigation but purely to do good – that can’t be greenwash, can it? … (since it’s beyond best practice, beyond traditional climate claims – companies will still need to make public claims carefully, it goes without saying, really). So buying is fairly risk free. (I say fairly risk free because there is still a chance there is fraud in the carbon credit supply chain.)
Such spending on carbon credits and nature credits might be much more cost effective than a company’s traditional marketing spend, which is hugely wasteful. You might have heard the advertiser’s mantra, which goes something like this: “I know I’m wasting half my marketing money but I don’t know which half.”
See figure below and in report (below that) for an illustration of non-compensation buying.
Bottom line for corporations: consider switching money away from wasteful traditional marketing toward climate saving and nature protection.
Source: Oxford, see below and link above – CarrZee added dashed area in red to highlight the important bit.
Figure 4: Example of a Net Zero Aligned Offsetting Portfolio. An illustrative (not to scale) breakdown showing the proportion of different project types that could be used to address residual emissions between 2020 and 2050. This is not what the current market reflects but what an outcomes-based portfolio on the path to net zero could look like. It is not intended to be read precisely or prescriptively but shows a plausible net zero aligned offsetting pathway compatible with Principles 2 & 3. The figure demonstrates the move from projects based on emissions reductions (yellow) toward carbon removal (blue), and the shift from types with no storage or higher risk of reversal (lighter shades) to types with storage and lower risk of reversal (darker shades). The 100% line in Figure 4 indicates the total offsetting credit portfolio for the emissions attributable to the organisation’s value chain, including Scope 1, 2 and 3 emissions.64 The striped area above the line is used to indicate that investments across all credit types may be valuable as a contribution to wider mitigation efforts beyond an organisation’s value chain mitigation or net zero target, up to and beyond the net zero target date. Such contributions (not used for offsetting) may be particularly valuable to organisations that set climate-positive targets, especially from the perspective of beyond value chain or climate positive targets. Such targets and contributions are made for pragmatic and equity considerations in mind, acknowledging that some organisations will need to go further than net zero given equity considerations and the limited capacity of others to meet the target by the global net zero target date. An organisation may also have a nature or biodiversity target towards which investment in nature-based credits is appropriate, separate from efforts to counterbalance or compensate residual emissions.
This from more than a year ago (sellers ripped off by corrupt market structure for the past year imo):
Source Viridios (broker)
(Updated with charts and links and reports & snips … to make more clear)