A surge in demand for carbon offset credits – such as those from reforestation projects – has led to a tripling of prices since June 2021, the Financial Times reports. While the market is still unregulated, there are many companies still currently operating in it, both in conducting projects and in the brokering of offset credits.
With interest in offsetting rapidly increasing as businesses across the world set net-zero goals, this year is also expected to be a year of huge growth, and with supply “squeezed” (in the words of one broker), prices could be expected to rise further. In June 2021, prices were at US$4.65 per tonne of carbon, and as of January 2022 they had increased to US$14.40.
An expanding market and rising demand will create an elevated risk of ‘carbon fraud’, and this is leading to calls for global standards to be created for such carbon offsets. Power companies that have set net-zero goals and that have plans for large afforestation and reforestation projects, such as Eni, will be watching the market closely.