Carbon By Numbers in 2022

Since the Paris Climate Agreement at COP21, successive conferences have focused on implementation of commitments made to limit the rise in global temperatures. As 2030 and 2050 move another year closer, the widening of the gap between corporate commitments and actionable plans is fueling growth in Carbon Markets. So here are some key numbers from 2022 moving into 2023 which we find significant.

$100 trillion

The amount of Investment in lower carbon infrastructure required to comply with the Paris Climate goal of limiting warming below 2.0°C and achieve net-zero by 2050. It is estimated this includes $20 trillion in “stranded” assets which require retrofits or rip-and-replace strategies.

€98.42

EUA Futures, the futures price for the European Emissions trading scheme hit an all-time high in February. At the time of writing EU Futures prices remain strong at €89.03 per unit of CO2E [a metric ton of Carbon dioxide or equivalent greenhouse gas]. They quickly recovered from the price shockwaves that hit markets upon the outbreak of war in Ukraine.

3%

The estimated contribution to global emissions from the shipping sector. Shipping is a hard to decarbonize sector. Options include simply slowing ships down, replacing Marine Gas Oil [MGO] with Liquid Natural Gas [LNG] and, further down the line, alternative fuels such as Green Hydrogen. From 2024 Shipping emissions [excluding cargo] will be a new category covered by the EU ETS, a move designed to catalyze low carbon transformations. Until viable alternatives are deployed at scale, it’s likely to add a carbon premium to the Tonne-mile, a common metric for transportation costs. This effectively taxes shipping in and out of EU ports until low-carbon transformations can be achieved. Given the networked nature of shipping logistics, the EU rule change will have a global impact on infrastructure.

2026

India is mooting the launch of its mandatory Carbon Market in four years’ time. India has been arguing that less industrialized nations should not inherit their Nationally Determined Contributions to the Paris agreement from the West which spent generations burning fossil fuels. Instead NDC’s should allow longer time frames to decarbonize developing economies because they contributed less to the current climate crisis. At COP26 in Glasgow India’s PM Modi set a net-zero date of 2070, 20 years after the Paris goal.

500,000

A European head quartered energy company revealed it provided the greatest

tonnage of carbon credits for the first MENA voluntary carbon market auction hosted by Saudi Arabia’s public investment fund in October. Saudi Arabia made key announcements on its VCM at COP27 in Sharm El Sheikh adopting international standards to underpin traded carbon credits. Saudi Arabia produces around 11% of the World’s oil, the second biggest producer after the USA.

$2 billion

The Voluntary Carbon Market is estimated to have hit $2billion this year almost quadrupling since 2020. At current rates of growth VCMs could match mandatory market volumes in the first half of the next decade. Low-tax economies regard state endorsed VCM’s as a plausible alternative to carbon tax or the type of mandatory cap-and-trade systems embraced in the EU. Higher carbon credit prices seem a likely by-product of rapid growth in demand.

$270 billion

By June 22 there were 30 Mandatory Emissions trading Schemes covering 38 national jurisdictions with trade volumes estimated at $270 billion. This represents a modest increase of just over 3% but with expanded scope, and the scale up of markets like China, strong growth is likely to continue.

$486.2 million

Ghana has obtained its first payment under the Paris Agreement article 6, establishing global leadership in efforts to safeguard forest reserves. With one of the highest deforestation rates in Africa, Ghana became the third country to sign a similar agreement with the World Bank. Ghana’s forest reserve stands at 6.5 million hectares.

30th

The date in November 2023 when COP28 commences in Dubai. The event will be the first COP held in a GCC country since the Paris Climate Agreement. Momentum is building in the region with legacy energy expertise being re-deployed in clean tech, strategic investments in carbon markets and a focus on credit generating projects.

56.33 billion

Tons of CO2E. This is the tonnage of carbon dioxide and equivalent greenhouse gases emitted in 2021. The volume is calculated by Climate Trace, a technology organization backed by former Vice President Al Gore. Climate Trace estimates emissions from over 70,000 sources. Analysts predict that global emissions will rise by around 1% in 2022. Other sources estimate lower total tonnage but generally agree on patterns of growth.

Sources: BNY Mellon – An Investor’s Guide to Net Zero by 2050, Trader View EUA Futures data, Carbon Risk Substack, Carbon Pulse, Various news sources, ClimateTrace.org, Energy Live News, Ghanaian Times