Why Carbon Credits?
Carbon credits are an emerging high-growth asset class driven by increasing global moral, national, and corporate net-zero commitments and legislative demands to attach a price to carbon production for addressing climate change.
The market for carbon credits comprises the mandatory market (used by companies and governments that are legally mandated to offset their emissions) and the voluntary carbon market operating in parallel (allowing private companies and individuals to purchase carbon offsets on a voluntary basis).
The voluntary market is expected to grow, unaided by legislation, on the back of net-zero pledges. With an increasing number of companies now seeking carbon credits to offset their CO2 emissions, the market for carbon credits continues to tighten.
According to the State and Trends of Carbon Pricing 2021 report published by World Bank Group:
As of April 2021, there are 64 Carbon Pricing Instruments (CPIs) in operation and three scheduled for implementation. This is an increase of 6 instruments compared to 2020, which had 58 carbon taxes and Emission Trading Schemes (ETSs) in operation.
As of April 2021, 21.5% of global greenhouse gas emissions are covered by CPIs in operation, representing a significant increase on 2020, when only 15.1% of global emissions were covered. This increase is largely due to the launch of China’s national ETS.
In 2020, CPIs generated US$53 billion in revenue globally. This is an increase of around US$8 billion compared to 2019, largely due to the increase in the EU allowance price.
With EU and many European countries already achieving carbon pricing of US$ 50～130 / tonne and industry incorporating US$ 80 to 100 / tonne of carbon pricing by 2030 as part of their asset valuation, deepC Store supports the industry view that the above carbon credit pricing range can be achieved in Australia and the Asia Pacific by 2030, and that deepC Store’s CCS projects, together with other large-scale CCS projects developed by others, can be sanctioned.
