September 2023 Voluntary Carbon Offsets Update
News
Financial trade group calls for standardized carbon market accounting. The International Swaps and Derivatives Association (ISDA) has released a whitepaper addressing the lack of accounting standards for carbon credit trading under International Financial Reporting Standards and US Generally Accepted Accounting Principles. The paper focuses on the treatment of voluntary credits under IFRS and urges the International Accounting Standards Board and the Financial Accounting Standards Board to collaborate on developing unified rules. It discusses how offsets can be considered economic resources and highlights the need for clear accounting practices as the voluntary carbon market evolves. ISDA suggests that inconsistent accounting could undermine the integrity of the carbon market and calls for unified standards to ensure comparability and investor confidence.
Carbon removal purchases jump tenfold in 2023. According to Sylvera's State of Carbon Credits 2023 report, the transactions for durable carbon removals have increased more than tenfold in the past year, reaching over 6.5 million metric tons. The report highlights a drop in prices across all project types in 2023 attributed to media scandals targeting the voluntary carbon market. However, many are now focusing on early-stage investment, particularly in nature-based projects, as a means of risk management. REDD+ (Reducing Emissions from Deforestation and Forest Degradation) projects have seen the highest credit issuance and are rated most highly for quality, with four projects achieving an AA rating. The report also notes growing interest in advanced purchases by buyers and anticipates convergence between the voluntary carbon market and compliance markets in the future.
Verra launches investigation into Kariba REDD+ project. Verra has halted the issuance of carbon offsets for the Kariba REDD+ project and launched an investigation in response to a recent investigative article in The New Yorker. The article makes fresh accusations of trophy hunting and financial malpractice associated with the Zimbabwean project. Verra stated it was "deeply disturbed" by the article's details and will investigate the allegations, keeping the project and any further carbon offset issuances on hold until the investigation is completed. Previous reporting had already raised concerns about over-crediting in the Kariba project, but the new allegations are significant and prompt further scrutiny.
Issuances flat; retirements up
19.72 million offsets were issued in September, up by only 12,927 from August. Retirements jumped from 5.67 million to 9.71 million. Both issuances and offsets continue to track below 2022 and 2021 levels.
Waste and Landfill, Alternative Energy, and Emissions represented a large sum of the total issuances
Waste and Landfill projects accounted for 7% of issuances, up from 4% in August, while alternative energy issuances slid from 19% to 6%. Emissions issuances jumped from 5% to 12%. Retirements primarily consisted of Energy and Forestry projects.
The surplus of unused offsets increased by the smallest amount so far in 2023
The bank of offsets increased by 10 million tons in September, driven by higher retirement numbers. The bank currently stands at 1.04 billion tons.