Carbon price rises again as farmers tackle new market rules

The spot price of carbon just hit $ 50 per unit, climbing 16% in just weeks to set a record.

The carbon market is growing rapidly after new rules for voluntary trading were set at COP26 and the global business community rallies around the net-zero movement.

Key players from around the world and Australia discussed the changes at the Emissions Reduction Summit in Sydney.

Marion Verles, managing director of global certification body SustainCert, said Article 6 of the COP26 agreement sets the framework for the new system.

“There is a very specific language around the definition of baselines, the definition of additionality, the monitoring of impacts on sustainable development, the establishment of complaints mechanisms and the guarantee of adequate consultation. with stakeholders. “

Marion Verles says the rule changes for the voluntary carbon trading market are important.(Provided: Carbon Market Institute)

He also closed a loophole for double-deduction by declaring that each country’s reduction figures had to be “adjusted” to account for offsets sold to large corporations, airlines or other voluntary buyers in the carbon market.

What does this mean for farmers?

If a farmer is reducing his herd’s methane emissions by giving them methane reducing additives, storing more carbon in the soil, or increasing biodiversity on the farm, they can’t sell those credits and always claim to be zero. net thereafter.

SustainCert surveyed 60 companies and other groups involved in carbon trading to understand where companies are heading on this issue and the consensus according to Ms. Verles is that you can’t do both.

She said companies were starting to realize that if they wanted to reduce their scope three emissions, they needed to make sure there was no “carbon escape.”

Sustainability is now a driver of profit

The way the equity market and investors view carbon trading is changing.

Andrew Duncan, head of debt capital markets at HSBC investment bank, said companies that thought about sustainability attracted more capital.

Andrew Duncan on stage at the Emissions Reduction Conference
Green businesses attract more capital, according to Andrew Duncan.(Provided: Carbon Market Institute)

“All investors look at that and say whether or not you lead green initiatives, give more disclosure or set goals – it’s part of good governance and good risk management, and the stock and bond markets reward. those who are active. ”

New methods being tested

In Australia, the federal government is considering approving new methodologies for earning carbon credits under its Emissions Reduction Fund.

The buzzword now is “stacking” credits – getting income from multiple sources.

Skye Glenday is the CEO of the nonprofit Climate Friendly, which partners with farmers, foresters and indigenous groups to develop new projects.

The organization is working on a pilot study with CSIRO to test new methods on a Queensland property called Bareeda.

And while new methods are tested, the Clean Energy Regulator plans to set up a credit bureau so that landowners don’t have to go through a middleman to find a buyer.

It’s a complex world, but as the price of carbon rises, more and more farmers are wondering what it takes to play in the carbon trading market.

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