Category: carbon markets

Financing a Net-Zero Future with Carbon Credit Streaming



The following content is sponsored by Carbon Streaming Corporation.

Financing a Net-Zero Future with Carbon Credit Streaming

Financing a Net-Zero Future with Carbon Credit Streaming

The world is advancing towards a net-zero carbon future, but achieving it will require a larger role for carbon credits.

A carbon credit is a tradeable certificate that represents one metric ton of carbon dioxide (CO2) or the CO2 equivalent (CO2e) of another greenhouse gas (GHG) that is prevented from entering the atmosphere or is removed from the atmosphere. Organizations purchase and use these certificates to offset their emissions that are difficult to reduce or control.

This infographic sponsored by Carbon Streaming Corporation explains how the company is funding the fight against climate change by bringing the streaming model—traditionally used in mining and energy—to the growing market for carbon credits.

The Rising Need for Climate Action

Global GHG emissions have risen alongside the expansion of industries and economies.

Since the Industrial Revolution, atmospheric concentrations of CO2 have increased at a rate at least 10 times faster than at any other time during the last 800,000 years. Consequently, global surface temperatures have risen, bringing the world closer to the devastating effects of climate change.

According to the latest United Nations Emissions Gap Report, limiting global temperature rise to 1.5°C requires a 50% reduction in GHG emissions by 2030 relative to current levels. While attaining this goal seems difficult, carbon credits can help get us closer to it.

What are Carbon Credits, and How Can They Help?

Carbon (Read more...)

Why the Demand Outlook for Carbon Credits Is Bright



The following content is sponsored by the Carbon Streaming Corporation.

 

Carbon Credits

The Briefing

  • Demand for carbon credits (also referred to as carbon offsets) is poised to skyrocket as corporations aim to meet climate goals.
  • By 2050, demand for carbon credits could rise up to 100-fold.

Why the Demand Outlook for Carbon Credits Is Bright

More than ever, carbon credits are playing a critical role in tackling climate change.

Based on demand projections for carbon credits, the voluntary carbon market could grow up to 100-fold by 2050. Voluntary carbon markets are where carbon credits can be purchased by those that voluntarily want to offset their emissions.

In this graphic sponsored by Carbon Streaming Corporation, we show two demand scenarios in voluntary carbon markets:

 NGFS scenarios (GtCO₂)NGFS “immediate action” 1.5°C pathway scenario (GtCO₂)*
20200.10.1
2030E1.52.0
2050E<7<13

*With carbon dioxide removal
Source: McKinsey, NGFS = Network for Greening the Financial System

First, one gigaton is equal to one billion metric tons of CO₂— or one trillion kilograms.

According to the forecast from McKinsey, annual global demand for carbon credits could reach up to 1.5 to 2 billion metric tons of carbon dioxide by 2030 and up to 7 to 13 billion metric tons by midcentury.

This has steep implications for the voluntary carbon market: McKinsey estimates that in 2020 just a fraction of these totals were retired by buyers, at roughly 95 million metric tons.

How Do Carbon Credits Work?

A carbon credit represents one metric ton of greenhouse gas (GHG) emissions.

As companies contend with time and technological gaps in reducing their emissions, they purchase carbon credits to help offset their emissions. These purchases are facilitated by brokers who connect corporate buyers with project developers.

Project developers create carbon offset projects, such as protecting mangroves or reforestation. These projects, in turn, generate carbon credits.

Some projects also advance multiple United Nation Sustainable Development Goals by providing additional economic, social, educational, or biodiversity benefits.

Here is the transaction volume and value of the voluntary carbon markets.

YearVolume (MtCO₂e)Value (USD)
2021239$748M
2020188$473M
2019104$320M

Source: Ecosystem Marketplace, through Aug 31, 2021

In 2021, the value of the voluntary markets is projected to reach $1 billion— a record high. Driving this demand are corporate net-zero commitments, among other factors.

For instance, 1,565 companies with $12.5 trillion in revenue have set net-zero targets. Not only that, the 128 signatories of the Net-Zero Asset Managers Initiative, that represent $43 trillion in managed assets, are committed to supporting the goal of net-zero GHG emissions by 2050 or sooner.

As bold action is being increasingly expected from shareholders, carbon credits will likely play a greater role in corporate climate strategy.

Where does this data come from?

Source: McKinsey, ‘A blueprint for scaling voluntary carbon markets to meet the challenge,” January 2021.

The post Why the Demand Outlook for Carbon Credits Is Bright appeared first on Visual Capitalist.

A Complete Visual Guide to Carbon Markets



The following content is sponsored by Carbon Streaming Corporation.



Carbon

A Complete Visual Guide to Carbon Markets

Carbon markets enable the trading of carbon credits, also referred to as carbon offsets.

One carbon credit is equivalent to one metric ton of greenhouse gas (GHG) emissions. Going further, carbon markets help companies offset their emissions and work towards their climate goals. But how exactly do carbon markets work?

In this infographic from Carbon Streaming Corporation, we look at the fundamentals of carbon markets and why they show significant growth potential.

What Are Carbon Markets?

For many companies, such as Microsoft, Delta, Shell and Gucci, carbon markets play an important role in offsetting their impact on the environment and meeting climate targets.

Companies buy a carbon credit, which funds a GHG reduction project such as reforestation. This allows the company to reduce their GHG emissions over a given time frame. There are two main types of carbon markets, based on whether emission reductions are mandatory, or voluntary:

Compliance Markets:
Mandatory systems regulated by government organizations to cap emissions for specific industries.

Voluntary Carbon Markets:
Voluntary systems where carbon credits can be purchased by those wanting to offset their emissions.

As demand to cut emissions intensifies, voluntary carbon market volume has grown five-fold in less than five years.

Drivers of Carbon Market Demand

What factors are behind this surge in volume?

  • Paris Agreement: Companies seeking alignment with these goals.
  • Technological Gaps: Companies are limited by technologies that are available at scale (Read more...)