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The downward trend of voluntary carbon prices and transacted volumes during January and February indicates that the global economic recession has now also spread to the voluntary carbon market. Our New Carbon Finance Voluntary Carbon Index (VCI), which tracks over-the-counter (OTC) transactions on the wholesale market, decreased by 29% from Nov/Dec price levels (from $7.3/tCO2e to $5.2/t), and by 38% from its peak in July/Aug (from $8.4/t to $5.2/t). The economic recession has also impacted trading activity as transacted volumes tracked by the VCI decreased by almost 70% since Nov/Dec (from 2.7Mt to 0.9Mt).
The VCI data collected over the past 8 months has revealed that standards are by far the largest price driver for voluntary credit prices. As a result of this clear finding and using our data on each standard’s market share over the past 6 months we have opted to make a one-time change in our VCI methodology. Going forward VCI prices will be weighted according to each standard’s current market share rather than transaction volume (see Methodology section at the end of this document for more information). The index will be re-evaluated on a six-monthly basis.
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