October 2024 VCM Updates: Section A
This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.
This is a newsletter from sustainacraft Inc. This article is Section A (Market Trends) of VCM Updates (Voluntary Carbon Market Updates).
Starting this month, we have changed the format to summarize market trend data at the top, followed by detailed explanations below.
«VCM Updates Structure»
A. Voluntary Carbon Credit Market Trends ← This article's focus
Credit Issuance, Retirement, and Investment Trend Analysis
Project Pipeline Analysis
Detailed Explanation Section
Investment Cases in Nature-based Projects
Carbon Credit Retirement Company Case Studies
Project Pipeline Case Studies
B. Trends in Major International Regulations
Introduction
Regarding Credit Issuance, Retirement, Investment Trends, and Project Pipeline Trends
Regarding issuance and retirement trends, while Verra (VCS) continues to account for the majority of Credit Retirements, an increasing proportion of Issuances are observed from standards other than Verra, such as Gold Standard (GS), Climate Action Reserve (CAR), and American Carbon Registry (ACR).
A number of new Pipeline projects are emerging that generate Removal Credits, such as Verra's VM0047 (Terrestrial Afforestation, Reforestation and Revegetation), VM0042 (Agricultural Land Management, including Regenerative Agriculture), and VM0033 (Mangrove Reforestation). Projects using Gold Standard's new Alternate Wetting and Drying (AWD) (rice paddy methane reduction) Methodology and Afforestation Methodologies are also increasing. While some companies pursuing high quality are focusing on the new Afforestation Methodology VM0047, we frequently hear Project Developers discussing a shift to standards other than Verra, indicating a need to closely monitor future Pipeline trends.
Regarding investment in Nature-based projects, in addition to tech companies like Microsoft, Google, and Meta, Tokyo Gas and Coca-Cola have also announced investments in funds targeting Nature-based projects.
Regarding Credit Retiring Company Use Cases
For Credit Retiring company use cases last month (September 2024), this article features the French energy company ENGIE and the financial institution Goldman Sachs.
ENGIE's Science Based Targets (SBT) have been validated, but it is registered as an "Electricity" sector company. As an eligibility criterion for SBT, companies directly involved in the exploration, extraction, mining, and/or production of oil, natural gas, coal, or other fossil fuels at any level are not allowed to participate. Even if a company does not fall into this category, it cannot participate in SBT unless it meets the condition that its revenue derived from a) the sale, transmission, or distribution of fossil fuels, or b) the provision of equipment or services to fossil fuel companies, is less than 50%.
In Japan, currently, Kyushu Electric Power is the only large company in the Electricity sector with SBT-validated targets. In contrast, nearly 80 companies in Europe are either committed to or have validated SBT targets in the Electricity sector.
While the SBT Sector Guidance for the oil and gas sector is still under development, within the broader energy industry, some European electricity companies are showing a trend of accelerating their procurement of Carbon Credits.
A. Voluntary Carbon Credit Market Trends (Verra)
A-1: Carbon Credit Issuance, Retirement, and Investment Trend Analysis
- Registries analyzed: Verra, Gold Standard (GS), Climate Action Reserve (CAR), American Carbon Registry (ACR)
- Period covered: September 2024
- Note: Please be aware that companies that retire Credits are not obligated to register under their real names with the registries, and therefore, accuracy cannot be guaranteed. Additionally, there may be delays in reflection on the registries, so please note that the number of projects, or their status, within this period may change in the future.Issuance and Retirement performance for the period covered is as follows (figures in parentheses represent year-on-year change):
- Issuance Performance: 23.22 million (+69%), of which Nature-based: 4.41 million (+48%)
- Retirement Performance: 9.72 million (largely unchanged), of which Nature-based: 5.03 million (+27%)
<List of Issued Projects>
Below are the top 10 projects for which Credits were issued during the period covered.
<List of Retired Projects>
Below is a list of the top 10 Nature-based projects that had the most Credits retired during the period covered.
<List of Retiring Companies>
Below are the top 10 companies that retired Carbon Credits from Nature-based projects during the period covered. Excluding Goldman Sachs, the first eight companies are primarily energy, oil and gas companies, and airlines. Engie and Goldman Sachs are introduced below as individual use cases. PetroChina was covered in the August newsletter, and Eni in the March newsletter.
Finally, Marsh McLennan is a U.S. professional services firm providing insurance and management services. Altius Minerals is a Canadian mining company.
<Investment Trends in Nature-based Projects>
In September, the following five investments in Nature-based Carbon Credit generation projects were reported. This section focuses solely on investments in nature restoration and REDD+; other projects such as CCS are not included. Additionally, "Credit volume" and "Investment amount" may, in some cases, represent future projected values.
A-2: Project Pipeline Trends
Registries analyzed: Verra, Gold Standard (GS)
Period covered: September 2024
Note: Please be aware that there may be a slight time lag in reflection on the registries, so please note that the number of projects or their status within this period may change in the future.
Terminology: Annual ER refers to the annual Emission Reductions/Removals (tCO2e).This section will first introduce new Pipeline projects and then review significant changes in last month's Pipeline that were not reflected in the previous newsletter.
<This Month's Pipeline>
The Pipeline includes a total of 43 projects of all types. Regarding Nature-based projects, the following 11 are included:
<Key Changes in Last Month's Pipeline>
In last month's newsletter, the August Pipeline included three natural capital projects. Following the latest data update, VCS-4811 project has been newly added. VCS-4811 is an ARR project implemented in India, with an estimated annual Emission Reduction of 5,063 tons.
A-3: Detailed Explanation Section
This section provides a more detailed explanation of some of the retiring companies, investment cases, and pipeline projects mentioned above.<Investment Trends in Nature-based Projects>
This section introduces information on investments in Nature-based projects that were announced last month.