Companies across the globe are taking action to eliminate GHG emissions, but the goal of reaching net-zero emissions won’t happen overnight. Limitations, including technological and financial roadblocks, have forced companies to explore ways to deliver meaningful and effective changes now, not just for the future.
While the shift to carbon neutrality will require making emissions reductions, not all emissions can be eradicated right away, which makes the voluntary carbon markets one way to manage the climate impact of emissions now. Voluntary carbon markets are a way for carbon-emitters to offset their own footprint through the purchase and retirement of carbon credits, which are produced by projects that either avoid GHG emissions or remove them from the atmosphere. Not only does this transaction serve as resource for companies looking to meet GHG reductions goals, it also helps to target corporate investment to projects that can make a real difference for both the climate and local communities.
Carbon pricing under the Paris Agreement is moving beyond local and regional compliance to a global stage, setting up a heterogeneous marketplace with a broad range of mechanisms, standards, and types. International trade with a broad range of specifications fits well with Platts pricing strengths. Trading of Carbon credits, particularly sequestration, will be required to meet both compliance and voluntary emission targets. Carbon pricing is already becoming an important attribute across commodities and has the potential to represent the marginal pricing element in many core Platts benchmarks. Airlines have committed to reducing their Carbon footprint through an initial voluntary period (2021-2023) and a subsequent mandatory reduction period (2024 onwards).