The CME-listed offset futures have continued to rise, with the GEO futures trading above $2/ton and the N-GEO futures back above $1/ton. Much of this rally has been attributed to the project vintage roll, which takes place on July 1 each year. This year the cheaper 2016 and 2017 deliverable vintages were dropped out of the contract and replaced with more expensive 2023 vintages.
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The Voluntary Carbon Market Integrity Initiative has published its Claims Code of Practice. This offers companies a rulebook for credible climate claims in voluntary carbon markets. This code aims to build market confidence in companies' engagement with VCMs and clarifies the landscape of these markets. The Claims Code establishes three tiers of claims (Platinum, Gold, and Silver), recognizing GHG emission reductions beyond corporate targets. It requires companies to meet VCMI's Foundational Criteria, choose a claim tier, use carbon credits meeting quality standards, and disclose information with independent validation and assurance. The code has undergone multi-stakeholder collaboration and has garnered positive feedback. VCMI calls on companies to adopt the Claims Code to promote a high-integrity market.
VCMI claims code may be out of reach for many companies. The voluntary carbon market experts are expressing concerns about the Claims Code introduced by the Voluntary Carbon Markets Integrity Initiative (VCMI). They worry that the code sets the bar too high for companies to easily purchase carbon credits, potentially leading to decreased demand. Analysis shows that a significant number of active carbon credit buyers may not reach even the lowest tier of the code due to their current practices.
Guyana looks to sell its remaining REDD+ credits. Guyana has garnered interest in selling the remaining 70% of its REDD+ credits following a significant deal with US energy company Hess. Vice President Bharrat Jagdeo clarified that the country is not in a hurry to sell the remaining credits and is considering other markets. Guyana signed a $750 million agreement with Hess last year to supply jurisdictional REDD+ credits over ten years.
New CFTC taskforce to clamp down on offset fraud. The US Commodity Futures Trading Commission (CFTC) has established two task forces to address environmental fraud. The Environmental Fraud Task Force will focus on fraud and misconduct related to climate change and environmental risks in regulated derivatives markets and spot markets such as the voluntary carbon market. It will examine the authenticity and credibility of environmental benefits claimed by carbon credits and address greenwashing and misrepresentations regarding environmental social and governance (ESG) products or strategies.
Issuances hit year-to-date high, retirements up slightly
Issuances jumped to 37.18 million tons in June, while retirements rose to 11.22 million tons. This brings issuances to the highest level of 2023 so far, while retirements remain below year-ago levels.
Forestry leads issuances, Energy leads retirements
As usual, forestry and energy projects were the bulk of both issuances and retirements. Issuances were led by forestry projects and retirements by energy projects. This was a sizeable change from May which saw energy and forestry projects occupy a much smaller percentage of total offsets issued and retired.
The surplus of unused offsets has reached 1 billion tons
The bank of offsets increased for another month, bringing the total surplus of credits to 1 billion tons for the first time. This supply overhang should continue to keep pressure on offset prices.