December 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.
«VCM Updates Structure»
A. Voluntary Carbon Credit Market Trends ← Subject of this article
Carbon Credit Issuance, Retirement, and Investment Trend Analysis
Project Pipeline Analysis
Detailed Explanation Section
Investment Cases in Nature-based Projects
Case Studies of Credit Retirement Companies
Project Pipeline Case Studies
B. Trends in Major International Regulations
Introduction
On Carbon Credit Issuance, Retirement, Investment Trends, and Project Pipeline Trends
Regarding Carbon Credit Issuance trends, the overall volume decreased by more than 30% year-on-year, but for nature-based projects, it remained largely flat. In terms of the proportion of issuing registries, Gold Standard and American Carbon Registry continue to hold a share comparable to Verra / Verified Carbon Standard. For Retirement trends, the volume saw no significant change year-on-year, and Verra / Verified Carbon Standard continues to account for the majority of registry shares. This article introduces six initiatives, including Rio Tinto and Petrobras, as investments in nature-based projects.
There were not many new Pipeline projects this time, with only three, but the trend of projects generating Removal / Sequestration Carbon Credits, such as Verra's VM0047 (Afforestation, Reforestation and Revegetation for terrestrial areas) and VM0042 (Agricultural Land Management, including Regenerative Agriculture), continues.
Regarding Credit Retirement Company Use Cases
As Carbon Credit Retirement company use cases for October 2024, this article features French logistics company Geopost and US financial institution JP Morgan Chase.
In the logistics industry, it is common, especially in Japan, to Offset emissions generated during transportation. For example, our November newsletter mentioned Yamato Transport's Retirement. Geopost, which we are covering this time, has announced that it will cease Offsetting emissions from deliveries from 2024 onwards. The Retirments observed this time were used to Offset 2023 emissions, so Retirments may decrease from next year.
Regarding the use of Carbon Credits in the financial industry, the Net Zero Banking Alliance (NZBA)'s target setting guidelines state that reliance on Carbon Credits to achieve final Net Zero should be limited to Carbon Dioxide Removal to balance Residual Emissions where technically or economically viable alternatives for Emission Reduction are limited. The guidelines do not specify a clear approach for their use towards interim targets. This article will show how JP Morgan Chase, also an NZBA member, has been undertaking Credit Retirement.
Incidentally, the NZBA has recently been in the news due to Goldman Sachs' announcement of its withdrawal. This is analyzed to be due to political pressure in the United States, particularly from Republicans concerned about restricting access to finance for the oil and gas industry. Goldman Sachs states that it will maintain its commitment to sustainability and continue to invest in renewable energy even after leaving the NZBA. However, concerns have been raised that this withdrawal could trigger similar moves by other financial institutions and weaken the momentum for climate action in the financial sector. We will continue to cover developments in the financial industry in our newsletter as they arise.
A. Voluntary Carbon Credit Market Trends (Verra)
A-1: Carbon Credit Issuance, Retirement, and Investment Trend Analysis
- Registries analyzed: Verra / Verified Carbon Standard, Gold Standard, Climate Action Reserve, American Carbon Registry, Puro.earth, Isometric
- Period: November 2024
- Note: Please be aware that companies that have retired Carbon Credits are not obligated to register with their real names with the registry, so accuracy cannot be guaranteed. Also, there may be delays in reflection on the registries, so please note that the number of projects and their status may change during this period.Issuance and Retirement results for this period are as follows (figures in parentheses are year-on-year comparisons).
- Issuance: 15.99 million (-36%), of which nature-based 6.00 million (+1%)
- Retirement: 14.84 million (+5%), of which nature-based 7.01 million (-13%)
<List of Issued Projects>
Below are the top 10 projects for which Carbon Credits were issued during this period.
<List of Retired Projects>
The list of the top 10 nature-based projects with the most Retirments during this period is as follows.
<List of Retiring Companies>
The top 10 companies that retired Carbon Credits from nature-based projects during the period are listed below. This newsletter features French logistics company Geopost and US financial institution JP Morgan Chase. ENTEGA and PetroChina are companies in the energy and oil & gas sectors that we have covered multiple times before, so they will be omitted from this issue's newsletter. For more details on PetroChina, please refer to our August newsletter.
<Investment Trends in Nature-based Projects>
- Period: November 2024
- Note: This covers investments in nature restoration, REDD+, and nature-based Carbon Dioxide Removal projects. Also, "Carbon Credit volume" and "investment amount" may be projected values for the future.In November, there were six significant investments in nature-based projects.
A-2: Project Pipeline Trends
Registries analyzed: Verra / Verified Carbon Standard, Gold Standard
Period: November 2024
Note: Please be aware that there is a slight time lag for reflection on the registries, so the number of projects and their status may change during this period.
Terminology: Annual ER refers to the annual Emission Reduction / Sequestration volume (tCO₂e).This section first introduces new Pipeline projects and then reviews 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 12 projects of all types, with the following three nature-based projects.
<Key Changes in Last Month's Pipeline>
In last month's newsletter, the October Pipeline included 11 natural capital projects, but after the latest data update, one new project (VCS-5294) has been added.
A-3: Detailed Explanation Section
This section provides a more detailed explanation for some of the retiring companies, investment cases, and Pipeline projects introduced above.<Investment Trends in Nature-based Projects>
This section introduces content related to investments in nature-based projects announced last month.