VCM Policy News & Compliance Retirement Trends
Authors: Micaela Passetti and Fundi Maphanga
In this edition of our newsletter, we start with a roundup of this week’s key policy updates, ensuring you stay informed on the latest developments. We begin with the latest policy stories around the VCM, and will then explore differences in compliance retirements between 2023 and 2024.?
A summary of the latest policy updates:
Compliance Retirements - YTD figures
A decline in ARB Offset Issuances?
In 2023, total issuances for ARB Carbon Offsets (ARBOCs, or California Carbon Offsets, CCOs) amounted to approximately 16,249,556 credits. Issuances varied significantly throughout the year, with the highest figures recorded in February and the lowest in April.?
As of August 2024, total issuances for the year have reached approximately 6.3 million credits from ACR and Climate Action Reserve registries, falling below figures recorded on the same period in 2023, suggesting a potential decline in market activity or changes in retirement strategies. If this trend continues for the rest of the year, 2024 may end with a lower overall retirement volume compared to 2023. These figures differ from figures within the ARB Offset Credit Issuance list as credit cancellations have not been reflected in the ACR, CAR registries.
According to Carbon Pulse reports, the California Carbon Allowance futures contract settled at $33.59 on ICE Tuesday, whereas DEBS-tagged Golden California Carbon Offsets (G-CCOs) were valued at a premium on August 21st, subject to published Q3 California Carbon Allowance sale results settled at $30.24.?
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A rise in South Africa Carbon Offset Administration System Issuances
In 2023, the South African Carbon Offset Administration System (COAS) recorded a total of 1,101,772 tons of carbon offset issuances, with significant peaks observed in July and September. By comparison, 2024 has already seen substantial issuances amounting to 3,602,129 tons by August. Obligated companies are expected to make payments towards their carbon tax in June each year. The first phase of the carbon tax allows significant tax-free allowances, and has been extended until January 2026.?
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Even though retirements have experienced a significant decline, strong political commitment inspires confidence in the market's stability moving forward. South Africa’s National Treasury will soon propose regulations for carbon markets, defining the legal status of credits, their treatment under the Voluntary Carbon Market (VCM), the country’s Article 6 Policy Framework, Carbon Strategy, and carbon tax. The Treasury is expected to publish a consultation paper around October.
Retirements for Airport Carbon Accreditation Program
The Airport Council’s Airport Carbon Accreditation (ACA) programme, which currently has more than 580 airports listed across 88 countries, assesses and recognises efforts by airports to manage and reduce their carbon emissions through 7 levels of certification: ‘Mapping’, ‘Reduction’, ‘Optimisation’, ‘Neutrality’, ‘Transformation’, ‘Transition’ and ‘Level 5’.
In 2023, retirements for the Airport Carbon Accreditation Programme totaled 159,078, with peaks in June and December. For 2024, year-to-date retirements amount to 138,934, with significant figures in March and July. Despite variability and periodic spikes, 2024 has the potential to match or exceed 2023's performance.
Earlier this month, Delhi Airport (Indira Gandhi International Airport, IGAI) became the first Indian airport to achieve net zero carbon emission status. After demonstrating significant progress in reducing its scope 1 and 2 CO2 emissions by 90%, IGAI elected to offset the remaining residual emissions through approved offset removals to attain Level 5 net zero emission accreditation status.?
Retirements for Colombia’s carbon tax offset program
In 2023, the cumulative retirements for this period reached 16.2 million, while in 2024, year-to-date retirements amounted to 6.4 million. The data indicates a significant decline in retirements, particularly in February and August, where the drops were most pronounced. The Colombian tax rate rose by 10.28% in 2024 from $5 USD per ton to $6.60 USD per ton, according to Resolution 007 of 2024 published by the national tax authority (DIAN).
According to Carbon Pulse, the Colombian Ministry of Environment is expected to present a resolution for public consultation aimed at establishing an Emissions Trading System (ETS). Additionally, the government is anticipated to host the first auction of ETS allowances next year, which could significantly influence retirement patterns and overall carbon market activity in the country.
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