In 2012, voluntary actors contracted 101 million tonnes of carbon offsets (MtCO2e) for immediate or future delivery – 4% more than in 2011. The vast majority of these offset transactions (98.5 MtCO2 e) occurred bilaterally, or “over the counter” (OTC) rather than on any formal exchange, according to the Ecosystem Marketplace, State of the Voluntary Carbon Markets 2013 report.
This represents the second highest level of OTC market activity tracked in this report series, behind the 2010 market which was boosted by a sizable transaction of offsets generated through the voluntary Chicago Climate Exchange (CCX) – which wound down operations in the same year.
While offset demand grew, market value decreased 11% to $523 million as offset prices fell slightly for most project types. A sizeable portion of market value (64% of value associated with a contract type or $170 million) was paid to offset sellers at the point of transaction rather than offset delivery – primarily via spot contracts (35.6 MtCO2e, up 25% from 2011) and pre-payment for future delivery (8.7 MtCO2e, down 1% from 2011).
Another $97.5 million will be paid in future years, if and when the projects under contract deliver verifiable reductions. This finding reflects a significant shift in contract structures favoring upfront payments as the volume of verified tonnes has grown over time, boosting both offset supply and buyer confidence that projects are capable of verifying GHG reductions and delivering offsets.
In 2012, voluntary actors paid a volume-weighted average price of $5.9/tCO2e – slightly down from 2011’s $6.2/tCO2e, but significantly higher than the United Nations’ regulatory Clean Development Mechanism (CDM) carbon offset price of less than a $1/tCO2e.
Declining prices were most apparent in the highpriced credits range ($10+/tCO2e) where the volume of credits contracted at these prices fell by 46%. On the other hand, transacted volumes of credits at less than $5/tCO2e grew by 19%. Suppliers say this downward trend was primarily a function of perceived offset oversupply and knock-on effects of the collapse of the EU carbon price.
Over all of the years of market activity tracked in this report series, voluntary buyers have funded 763 MtCO2 e in emissions reductions worth $3.7 billion and at an average historical price of $5.9/tCO2e – equivalent to the 2012 market-wide average offset price.