The price of voluntary carbon credits has risen by 26% on 2007 prices and 60% on 2006 prices, says industry analyst New Carbon Finance. The figures are obtained from the company’s recently launched “Voluntary Carbon Index”, part of their research into the regulatory development of the North American carbon markets.

The VCI was created to track intra-annual price developments in the over-the-counter secondary VER market and is based on confidential information from operators in the market. New Carbon Finance tracked close to 3 million tonnes of carbon credits in July and August 2008, worth about US$18.9 million at an average of US$6.3 per tonne. ThVCI has identified several key trends in the voluntary carbon market.

• The average price of a project-level “secondary VER” rose 26% in the first half of 2008, from US$5.0/t in 2007 to US$6.3/t. This is significantly higher than the voluntary credits exchanged on the Chicago Climate Exchange. Those traded at an average of US$3.9/t during the first half and have now fallen to US$2.5/t.
• The emergence of the Voluntary Carbon Standard (VCS) as the most popular and dominant standard in the markets has been consolidated, with most volumes transacted through this standard. VCS credits have seen a 33% price increase (US$7.3/t) compared to their 2007 average value (US$5.5/t).
• Gold Standard (GS) VERs continue to be the “premium credit” commanding the highest average price at US$15.8/t, up 40%, and the standard developed by the Californian Climate Action Registry (CCAR) is also quickly gaining ground with prices 71% above the average VER price (US$10.8/t), likely due to demand from pre-compliance buyers.
• Project type is another important price determinant. As a sign of the increasing growth of the so-called pre-compliance market, methane projects accounted for the majority of offsets transacted in July and August and can currently obtain the highest prices. They have increased by 12% (US$7.3/t) from their 2007 price of US$6.5/t. Methane projects are particularly interesting as they are relatively inexpensive to develop and are most likely to be eligible in a future compliance programme.
• Prices for industrial gas and renewable energy credits have remained comparatively flat: renewable energy VERs traded at US$6.7/t and industrial gas at US$3.6/t. Forestry VERs have increased by 24% (US$5.2/t) from their 2007 price of US$4.2/t, a move likely attributable to the increased use of standards such as the CCB, CCAR and VCS.