Green Markets #7
Financial news in environmental markets.
Green Markets is a weekly series dedicated to highlighting events of interest or developing trends within environmental markets. The emphasis is on news that could impact investable opportunities in public stock markets.
ICVCM Approves Verra Under Core Carbon Principles
The Integrity Council for Voluntary Carbon Markets (ICVCM) has officially approved Verra and ART for eligibility under the Core Carbon Principles (CCP).
This now brings five carbon registries into the approved category— the American Carbon Registry, Gold Standard, and Climate Action Reserve were all accepted earlier this year. Together, these five registries account for 98% of the carbon credit issuances in the VCMs.
That said, just because the registries are approved doesn’t mean the credits these organizations have verified are in the clear. Each individual carbon methodology will also be accessed under the ICVCM’s criteria.
The Integrity Council has grouped more than 100 methodologies into 29 categories for assessment, which cover more than half the issued volume of credits in the market. Assessment of those methodologies has been underway since late 2023 and the Governing Board expects to announce its first decisions on the methodologies that meet the rigorous CCP standards in June, paving the way for the first CCP-labelled credits to appear in the market.
The Integrity Council does not assess individual carbon-crediting projects, and CCP-Eligible programs will be responsible for identifying credits that can be labeled, which ICVCM will oversee through its oversight functions.
The majority of categories of carbon credit methodologies raise complex issues in one or more specific aspects and are being assessed by expert Multi-Stakeholder Working Groups (MSWGs). The first three MSWGs have finished their work, and these categories of credits are expected to come to the Board for decision in the coming months. They are:
MSWG 1 – Improved Forest Management.
MSWG 2 – Sustainable Agriculture, Rice Cultivation Methane Avoidance, Nutrition / Nitrogen Management, Buffer Practices and Afforestation, Reforestation and Revegetation (ARR).
MSWG 3 – Grid Connected Renewable Energy, Mini-Grids, Renewable Energy.
MSWG 4 – Considering REDD+ (Reducing Emissions from Deforestation and Forest Degradation) and Jurisdictional REDD (JREDD) methodologies for forestry projects at national or sub-national scale, began in March.
MSWG 5 – Considering clean cookstoves and household biodigesters will begin in early May.
MSWG 6 – Set to begin in July will consider a number of issues in sequence, including biochar, tech-based CCS, industrial biodigesters and other clusters of methodologies that require more specialized review.
Plastic Treaty Negotiations
As mentioned in Green Markets #5, recent negotiations in Canada focused on the creation of a potential global plastic treaty, similar to the Paris Agreement for carbon emissions.
So far, nothing has been agreed upon definitively, but discussions have progressed to debating what should be contained in the treaty— rather than if we should have one at all… so things are moving in the right direction.
With that said, there’s fierce debate on topics like limiting plastic production, relevant chemicals, and other key details.
Notably, according to the Center for International Environmental Law, 196 lobbyists from the fossil fuel and petrochemical industries attended these meetings. So you could imagine where the opposition to limiting plastic production is coming from.
In reality, plastic use is so ubiquitous that curtailing production will not solve much, if anything. That’s why I’m convinced the only solution is to develop new recycling methods and clean-up efforts… but without novel processes at commercial scale, regulators have to make assumptions with the information they currently possess.
This was the fourth of five meetings, with the last taking place in December.
Relevant stock(s): Aduro Clean Technologies (future write-up)
AirAsia’s Sustainability
AirAsia, the largest airline in Malaysia, is set to start charging a sustainability fee within its airfares.
The fee will fund the development of new carbon offset projects in line with the emergence of CORSIA.
The company plans on achieving carbon neutrality by 2050 thanks to the usage of carbon credits, new technologies, and improving fuel efficiency.
A Vow to End Coal
The energy ministers of the G7 nations (US, UK, Canada, France, Germany, Italy, and Japan) have vowed to end the use of coal power by 2035.
According to the energy think tank Ember, coal was the fourth-largest source of electricity generation in the G7 in 2023, accounting for an average of 15% of the group's electricity last year.
Globally, the G7’s share of coal-fired electricity output is 11%, down from 26.5% in 2013 and 44% in 2003. This reveals that G7 countries have already made deep cuts to coal use amid intensifying pressure to decarbonize power systems.
New Green Funding Initiatives
Microsoft and Brookfield Asset Management have signed an agreement to build 10.5GW of new renewable energy projects across the United States and Europe between 2026 and 2030. The buildout of these projects is expected to cost over $10B in total.
Imperative Global Projects and Crossboundary Group are launching a new facility to fund early-stage carbon projects. The first project will be a large-scale reforestation and revegetation project in Sub-Saharan Africa covering up to 100,000 hectares of badly degraded land.