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US voluntary carbon market crashes on policy uncertainty

- Monday, November 02, 2009

The US voluntary carbon market has crashed heavily, with carbon now valued at less than US$0.10 per tonne, and both main aggregators no longer signing up farmers for the scheme, according to media reports. The Chicago Climate Exchange is currently quoting 2009 and 2010 contracts at less than US$0.10 per tonne, down from US$1.50 several years ago.


The Chicago Climate Exchange, which operates the voluntary carbon market in the USA currently is quoting a price of US$.10 per tonne for carbon offsets created by farmers who have voluntarily undertaken actions that are recognised as sequestering additional carbon in the soil. These offsets are purchased by large corporations in the USA, that are seeking to offset industrial emissions, either as part of a voluntary committment to reduce net emissions, or as a means of attaining 'carbon neutrality. According to a report in the Des Moines Register, the demand for carbon offsets has crashed due to policy uncertainty about whether or not these offsets will be accepted within the proposed emissions trading scheme that is currently being negotiated by US legislators. No doubt the global financial crisis also has something to do with the dampened demand, as corporations would have less output (and therefore less emissions to 'cover'), but also a reduced enthusiasm for non-essential expenditure.  
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