ECS 2022: Convergence Calls for Compliance and Voluntary Carbon Markets — OPIS

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BARCELONA – Speakers at the European climate summit on Wednesday said compliance and voluntary carbon markets need to unite to help create a high degree of sustainability.

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According to speakers at the summit, converging the two markets should enable harmonization of national accounting practices, create transparency that can avoid double counting of emissions and help align with local regulations. .

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The compliance market is used by companies and governments that by law must be responsible for their greenhouse-gas emissions. It is regulated by mandatory national, regional or international carbon-reduction regimes. In contrast, in a decentralized voluntary market, carbon credits are traded voluntarily by private individuals.

“These two markets are designed around the same infrastructure, with similar goals, and in some cases, there is a direct overlap with guaranteed value,” said Vera CEO David Antonioli. “However, it is important to understand that the drivers of these markets are very different.”

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For Antonioli, the idea of ​​convergence is interesting but it remains a question of how to design voluntary regulations that support government legislation.

“We need to ensure that private sector activity does not replace government actions. It will be important to figure out how to link the voluntary market with the regulator.”

Mark Woodall, C-Quest Capital’s chief investment officer, said the price calculations for the two markets are completely different.

“The voluntary market is not priced in the form of cost-to-production [market] But price as a price-to-price; It’s the difference between compliant and non-compliant markets,” Woodall said. “If we calculate the voluntary market, the cost per metric ton of carbon dioxide can be calculated by adding up the social and technological benefits. It needs a different mindset to calculate the cost of mitigation and cost of production.”

Meanwhile, other regions, such as Singapore and Japan, are taking steps to bring non-compliant systems into their compliance systems, Woodall said. Singapore is looking to use 10% of its compliance market for approved quality voluntary projects, he said.

The European Climate Summit, organized by the International Emissions Trading Association, runs from 23-25 ​​May in Barcelona.

–Reporting by Benita Driesen, [email protected]; Editing by Rob Sheridan, [email protected]

Credit: www.marketwatch.com /

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