Ten-fold Increase in Carbon Offset Cost Predicted

Prices of carbon credits used by companies to offset their emissions are currently low, due to an excess of supply built up over several years.

According to recent research at the University of London, without the excess supply, prices would be around $15/tCO2e higher, compared to $3-5/tCO2e today. (tCO2e means tonnes of carbon dioxide equivalent, “carbon dioxide equivalent” being a standard unit for counting greenhouse gas (GHG) emissions.)

The paper predicts that the surplus will not last forever, with demand for carbon credits expected to increase five to ten-fold over the next decade as more companies adopt Net Zero climate commitments. This growth in demand should see carbon credit prices rise to $20-50/tCO2e by 2030, as more investment is required in projects that take carbon out of the atmosphere in the long-term. With a further increase in demand expected by 2040, carbon credit prices could rise in excess of $50/tCO2e.

Guy Turner, CEO of Trove Research and lead author of the study said “It is encouraging to see so many companies setting Net Zero and Carbon Neutral climate targets. What this new analysis shows is that these companies need to plan for substantially higher carbon credit prices and make informed trade-offs between reducing emissions internally and buying credits from outside the company’s value chain.”

Imagine the stoves that could be supported by a $20 price for an avoided tonne of carbon dioxide. Stoves with good thermal efficiency can save three tonnes or more per year making long lasting, super clean stoves with chimneys a great deal for carbon developers and investors.

And a great deal for consumers.

Report: https://trove-research.com/wp-content/uploads/2021/06/Trove-Research-Carbon-Credit-Demand-Supply-and-Prices-1-June-2021.pdf