1 00:00:00,200 --> 00:00:03,000 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,320 --> 00:00:07,560 Speaker 1: the BNAF podcast. Twenty twenty three was a tumultuous year 3 00:00:07,680 --> 00:00:10,600 Speaker 1: for the voluntary carbon market, with highs and lows. There 4 00:00:10,640 --> 00:00:14,400 Speaker 1: was constant public scrutiny and high profile scandals that undermined 5 00:00:14,400 --> 00:00:18,880 Speaker 1: investor confidence. Meanwhile, despite the turmoil, the carbon offset market 6 00:00:18,880 --> 00:00:22,280 Speaker 1: actually grew to a record size, surpassing the previous high 7 00:00:22,360 --> 00:00:26,040 Speaker 1: set in twenty twenty one. This same year, companies retired 8 00:00:26,079 --> 00:00:30,120 Speaker 1: a wopping one hundred and sixty three million carbon credits. However, 9 00:00:30,440 --> 00:00:33,680 Speaker 1: global agreement on carbon credits failed to get traction yet 10 00:00:33,720 --> 00:00:36,599 Speaker 1: again at COP twenty eight in Dubai, and fears over 11 00:00:36,680 --> 00:00:40,839 Speaker 1: greenwashing continue, making twenty twenty four a potentially make or 12 00:00:40,960 --> 00:00:43,360 Speaker 1: break gear for the sector. So what is it going 13 00:00:43,440 --> 00:00:46,680 Speaker 1: to take to see stability and growth for carbon offsets? 14 00:00:46,920 --> 00:00:49,600 Speaker 1: Today we're going to talk about bnif's a recent twenty 15 00:00:49,680 --> 00:00:53,239 Speaker 1: twenty four edition of the Long Term Carbon Offsets Market Outlook, 16 00:00:53,360 --> 00:00:56,040 Speaker 1: where we put to the test several scenarios on how 17 00:00:56,120 --> 00:00:58,680 Speaker 1: this market could play out in the longer term. On 18 00:00:58,720 --> 00:01:01,840 Speaker 1: today's show, I'm joined by the head of sustainability research 19 00:01:01,920 --> 00:01:05,639 Speaker 1: for the America's and Emia Kyle Harrison and bnaf's Carbon 20 00:01:05,640 --> 00:01:09,520 Speaker 1: Offsets analyst Leila Kanfar. We review three of the nine 21 00:01:09,520 --> 00:01:12,000 Speaker 1: scenarios that they looked at in this report and discuss 22 00:01:12,040 --> 00:01:16,039 Speaker 1: whether they spell success, steady growth, or a disaster for 23 00:01:16,120 --> 00:01:19,720 Speaker 1: the offsets market. To access our long term Carbon offsets 24 00:01:19,760 --> 00:01:22,959 Speaker 1: outlook for twenty twenty four, BNIF subscribers are going to 25 00:01:22,959 --> 00:01:25,520 Speaker 1: be able to find this at BNAF dot com or 26 00:01:25,640 --> 00:01:28,559 Speaker 1: BNF go on the Bloomberg terminal. Subscribe to this show 27 00:01:28,640 --> 00:01:31,280 Speaker 1: for updates when we publish future episodes, and give us 28 00:01:31,280 --> 00:01:33,720 Speaker 1: a review to share us with others. But right now, 29 00:01:33,800 --> 00:01:36,560 Speaker 1: let's talk to Kyle and Laila about the outlook for 30 00:01:36,640 --> 00:01:48,800 Speaker 1: carbon offsets. Kyle, thank you for coming back to the 31 00:01:48,840 --> 00:01:49,400 Speaker 1: show today. 32 00:01:49,680 --> 00:01:50,640 Speaker 2: Yeah, thanks for having me. 33 00:01:50,680 --> 00:01:52,720 Speaker 1: Danna and Layla, thank you for coming as well. 34 00:01:52,800 --> 00:01:53,760 Speaker 3: Thank you for having me. 35 00:01:54,000 --> 00:01:57,400 Speaker 1: So we're here for an update regarding voluntary carbon markets 36 00:01:57,560 --> 00:02:00,400 Speaker 1: and what is happening in that space. Let's start by 37 00:02:00,600 --> 00:02:03,400 Speaker 1: looking back. We recently did an update and we're thinking 38 00:02:03,440 --> 00:02:06,440 Speaker 1: about twenty twenty three. So the year that just closed, 39 00:02:06,720 --> 00:02:09,280 Speaker 1: there were some notable things, not all of them good, 40 00:02:09,480 --> 00:02:12,120 Speaker 1: that happened in that year. Can you give us a 41 00:02:12,120 --> 00:02:14,440 Speaker 1: bit of a highlight of some of the things that 42 00:02:14,639 --> 00:02:17,840 Speaker 1: happened in the voluntary carbon market space that are helping 43 00:02:18,000 --> 00:02:20,640 Speaker 1: us really think about it and are shaping its future. 44 00:02:20,960 --> 00:02:23,760 Speaker 4: Well. To start, we faced a lot of media scrutiny 45 00:02:23,840 --> 00:02:27,280 Speaker 4: against the market in twenty twenty three. We saw major 46 00:02:27,360 --> 00:02:31,519 Speaker 4: headlines that just put buyers and other market players off 47 00:02:31,760 --> 00:02:34,520 Speaker 4: from the voluntary market, and this really forced people to 48 00:02:34,600 --> 00:02:37,760 Speaker 4: think what else could we do better in that market? 49 00:02:37,840 --> 00:02:40,960 Speaker 4: But following the media scrutiny, it kind of materialized into 50 00:02:41,000 --> 00:02:44,600 Speaker 4: something more. We saw big companies getting sued because they 51 00:02:44,680 --> 00:02:47,960 Speaker 4: use carbon offsets, so it was a continuous cycle of 52 00:02:48,440 --> 00:02:52,160 Speaker 4: media scrutiny, some lawsuits. The prices have dropped as well, 53 00:02:52,360 --> 00:02:55,280 Speaker 4: and that just spread a lot of discussion and concerns 54 00:02:55,320 --> 00:02:57,519 Speaker 4: around whether this market is even viable or if it 55 00:02:57,520 --> 00:03:00,600 Speaker 4: should play a role in the energy transition at all legitimate. 56 00:03:00,760 --> 00:03:04,000 Speaker 4: But again, towards the end of twenty twenty three, we 57 00:03:04,160 --> 00:03:08,480 Speaker 4: saw a bigger push for standardizing that market and addressing 58 00:03:08,560 --> 00:03:13,200 Speaker 4: those concerns, and it mainly came from private and independent organizations. 59 00:03:13,360 --> 00:03:16,000 Speaker 4: There was a lot of hope for a un lad 60 00:03:16,040 --> 00:03:20,520 Speaker 4: body to standardize it, but those discussions have fallen or 61 00:03:20,560 --> 00:03:22,200 Speaker 4: fell apart at cop twenty eight. 62 00:03:22,560 --> 00:03:25,280 Speaker 2: Yeah, and just to add to what Leilah is saying, so, 63 00:03:25,360 --> 00:03:27,400 Speaker 2: I think it was kind of a year of two halves. 64 00:03:27,480 --> 00:03:29,600 Speaker 2: Right in the beginning of the year, as Leila mentioned, 65 00:03:29,639 --> 00:03:31,840 Speaker 2: there was an article from The Guardian about a lot 66 00:03:31,840 --> 00:03:34,840 Speaker 2: of forestry projects. We're creating these carbon credits, right, these 67 00:03:34,920 --> 00:03:38,560 Speaker 2: verified emission reduction certificates that were not actually additional or 68 00:03:38,600 --> 00:03:40,840 Speaker 2: they were never actually being created in the first place. 69 00:03:41,240 --> 00:03:43,000 Speaker 2: But things really did start to pick up in a 70 00:03:43,000 --> 00:03:45,080 Speaker 2: positive way in the second half of the year, and 71 00:03:45,120 --> 00:03:47,000 Speaker 2: I think that all kind of came to fruition at 72 00:03:47,040 --> 00:03:50,440 Speaker 2: COP twenty eight. You had all the carbon offset registries, 73 00:03:50,560 --> 00:03:52,960 Speaker 2: you had some of the verification bodies and the standards 74 00:03:53,000 --> 00:03:55,280 Speaker 2: come together and say the private sector needs to take 75 00:03:55,320 --> 00:03:58,720 Speaker 2: a more active role in legitimizing this market. We can't 76 00:03:58,760 --> 00:04:01,880 Speaker 2: just rely on the UN or government bodies to do so. 77 00:04:01,880 --> 00:04:04,120 Speaker 2: So yeah, a lot of volatility. I think one of 78 00:04:04,160 --> 00:04:07,560 Speaker 2: the key indicators that we really saw that reflected kind 79 00:04:07,560 --> 00:04:10,160 Speaker 2: of some of the negative thoughts and feelings about this 80 00:04:10,240 --> 00:04:13,400 Speaker 2: market were futures prices. So, for example, there's a futures 81 00:04:13,440 --> 00:04:17,359 Speaker 2: product for voluntary carbon offsets called n GEO trades on 82 00:04:17,400 --> 00:04:19,800 Speaker 2: the CBL expanse of exchange, and what it does is 83 00:04:19,839 --> 00:04:22,960 Speaker 2: it bundles together a bunch of forestry carbon credits. And 84 00:04:22,960 --> 00:04:25,280 Speaker 2: at the beginning of twenty twenty three, that product was 85 00:04:25,320 --> 00:04:27,600 Speaker 2: trading at around six dollars a ton. If you fast 86 00:04:27,640 --> 00:04:29,360 Speaker 2: forward to the end of the year, it was trading 87 00:04:29,360 --> 00:04:31,600 Speaker 2: a closer to forty cents a ton. So that reflects 88 00:04:31,640 --> 00:04:33,520 Speaker 2: a lot of buyer sentiment in this market over the 89 00:04:33,560 --> 00:04:34,359 Speaker 2: past twelve months. 90 00:04:34,480 --> 00:04:36,719 Speaker 1: I mean, that's a pretty wild shift. But even then, 91 00:04:36,920 --> 00:04:38,839 Speaker 1: what you guys have just laid out is the fact 92 00:04:38,839 --> 00:04:42,720 Speaker 1: that this is a fundamental questioning of the role of 93 00:04:42,960 --> 00:04:46,960 Speaker 1: voluntary carbon in a net zero future. So let's kind 94 00:04:46,960 --> 00:04:48,719 Speaker 1: of break this down a little bit. So part of 95 00:04:48,720 --> 00:04:51,279 Speaker 1: it is the media scrutiny, which is something that is 96 00:04:51,400 --> 00:04:55,880 Speaker 1: not new. A view on greenwashing and whether or not 97 00:04:56,080 --> 00:04:58,760 Speaker 1: certain projects will be additional are things we've talked about 98 00:04:58,760 --> 00:05:01,160 Speaker 1: on this podcast, I think with both of you, maybe 99 00:05:01,200 --> 00:05:02,719 Speaker 1: not at the same time. This is in our first 100 00:05:02,760 --> 00:05:06,000 Speaker 1: podcast about voluntary carbon, but it's clear that this really 101 00:05:06,120 --> 00:05:08,560 Speaker 1: kind of came to a head in twenty twenty three. 102 00:05:08,640 --> 00:05:11,240 Speaker 1: So then you have this then second part of the 103 00:05:11,240 --> 00:05:14,960 Speaker 1: conversation that's around standardization. Can you go into a bit 104 00:05:15,040 --> 00:05:18,200 Speaker 1: more detail on well, first of all, what those bodies 105 00:05:18,360 --> 00:05:21,960 Speaker 1: look like and what the progress was on the standardization front. 106 00:05:22,640 --> 00:05:26,000 Speaker 4: So the market as of right now is quite fragmented. 107 00:05:26,200 --> 00:05:28,600 Speaker 4: So even if you do have those bodies that are 108 00:05:28,640 --> 00:05:31,680 Speaker 4: trying to standardize the market, when they first emerged, there 109 00:05:31,680 --> 00:05:33,920 Speaker 4: were a bunch of different ones and it looked like 110 00:05:33,960 --> 00:05:37,159 Speaker 4: they were operating independently of each other. So it kind 111 00:05:37,160 --> 00:05:39,920 Speaker 4: of just added another problem because why would you standardize 112 00:05:39,920 --> 00:05:41,919 Speaker 4: something with having too many cooks in the kitchen, And 113 00:05:41,960 --> 00:05:44,040 Speaker 4: we'll just end up with a more fragmented view of 114 00:05:44,080 --> 00:05:47,000 Speaker 4: the market, even if those fragments are standardized. But what 115 00:05:47,120 --> 00:05:49,560 Speaker 4: happened throughout twenty twenty three, especially towards the end, is 116 00:05:49,560 --> 00:05:54,400 Speaker 4: that those independent bodies started talking to each other and reconciling. 117 00:05:54,600 --> 00:05:57,840 Speaker 4: So one of the major ones is the Integrity Council 118 00:05:57,920 --> 00:06:00,960 Speaker 4: for Voluntary Carbon Markets, and you have another one called 119 00:06:01,040 --> 00:06:05,960 Speaker 4: the Voluntary Carbon Markets Initiative, And these two try to 120 00:06:06,160 --> 00:06:10,920 Speaker 4: target the supply and demand sides of the market. So 121 00:06:11,000 --> 00:06:15,160 Speaker 4: while the ICVCM looks at standardizing projects so from the 122 00:06:15,240 --> 00:06:18,200 Speaker 4: upper supply side and saying they need to be additional, 123 00:06:18,279 --> 00:06:20,760 Speaker 4: they need to be permanent, they need to be measurable 124 00:06:20,839 --> 00:06:23,599 Speaker 4: and just accounting for all the different risk factors that 125 00:06:23,640 --> 00:06:26,760 Speaker 4: would come when buying an offset. The VCMI, on the 126 00:06:26,839 --> 00:06:31,760 Speaker 4: other hand, targets corporations and buyers and tell them telling 127 00:06:31,920 --> 00:06:35,000 Speaker 4: or giving them incentive to buy high quality offsets. So 128 00:06:35,080 --> 00:06:38,159 Speaker 4: if you buy x percent of your offsets from this 129 00:06:38,279 --> 00:06:41,159 Speaker 4: high quality project, you're going to get a gold claim 130 00:06:41,240 --> 00:06:43,839 Speaker 4: for example. And now we see them talking to each 131 00:06:43,839 --> 00:06:47,160 Speaker 4: other and aligning those policies with one another. So those 132 00:06:47,200 --> 00:06:49,880 Speaker 4: are the two most prominent ones in the market right now. 133 00:06:49,960 --> 00:06:53,839 Speaker 4: You've also got a pseudo standardization body which is the 134 00:06:53,960 --> 00:06:57,760 Speaker 4: Science Based Targets Initiative the SPTI. Now the SBTi doesn't 135 00:06:57,800 --> 00:07:00,840 Speaker 4: really isn't really concerned with telling us what a good 136 00:07:00,839 --> 00:07:04,440 Speaker 4: and about offset looks like, but it sets very strict 137 00:07:04,720 --> 00:07:07,640 Speaker 4: science based that zero targets for companies and put some 138 00:07:07,680 --> 00:07:11,280 Speaker 4: guidelines and restrictions on how many offsets they can buy 139 00:07:11,440 --> 00:07:14,280 Speaker 4: and one but also if they should be avoidance or 140 00:07:14,320 --> 00:07:17,760 Speaker 4: removal offsets, which is also another big debate in the market. 141 00:07:18,000 --> 00:07:20,640 Speaker 4: So as of now, there are a bunch of different ones. 142 00:07:20,840 --> 00:07:23,040 Speaker 4: But towards the end of twenty twenty three, and this 143 00:07:23,640 --> 00:07:25,680 Speaker 4: became very clear at cop twenty eight when they all 144 00:07:25,720 --> 00:07:29,720 Speaker 4: announced collaborations to be announced or to issue those new 145 00:07:29,760 --> 00:07:31,120 Speaker 4: standards in twenty twenty four. 146 00:07:31,440 --> 00:07:33,080 Speaker 2: And I would just add, when you look at the 147 00:07:33,120 --> 00:07:36,520 Speaker 2: individual projects that populate this market, there's so much nuance 148 00:07:36,560 --> 00:07:39,679 Speaker 2: that goes into measuring the value of a carbon credit. 149 00:07:39,720 --> 00:07:42,480 Speaker 2: You know, Layla mentioned measurability before. You can have two 150 00:07:42,560 --> 00:07:45,920 Speaker 2: forestry projects right next to each other, and one tree 151 00:07:46,000 --> 00:07:48,440 Speaker 2: might be getting more sunlight than another tree, One tree 152 00:07:48,520 --> 00:07:51,160 Speaker 2: might be slightly older than another tree, and so the 153 00:07:51,240 --> 00:07:53,680 Speaker 2: roots and the soil are stronger. All of these factors 154 00:07:54,000 --> 00:07:57,520 Speaker 2: impact the overall carbon that's being sequestered by a certain 155 00:07:57,520 --> 00:08:00,240 Speaker 2: plot of land. And so as a corporate buyer, when 156 00:08:00,280 --> 00:08:03,559 Speaker 2: you're entering this market, you're essentially flying blind. You don't 157 00:08:03,600 --> 00:08:06,320 Speaker 2: know what a good nature based project looks like. You 158 00:08:06,320 --> 00:08:08,920 Speaker 2: don't know why a clean energy project in one market 159 00:08:08,960 --> 00:08:11,640 Speaker 2: is better than another. And as Leila mentioned, these registries 160 00:08:11,760 --> 00:08:13,960 Speaker 2: and these standards, we're not doing a good enough job 161 00:08:14,000 --> 00:08:18,000 Speaker 2: of clarifying and differentiating between individual projects. And so what 162 00:08:18,080 --> 00:08:20,800 Speaker 2: these groups like ICVCM and VCMI are trying to do 163 00:08:20,920 --> 00:08:23,080 Speaker 2: is set a bar or threshold for what does good 164 00:08:23,080 --> 00:08:26,480 Speaker 2: look like, and theoretically anything above that bar that threshold 165 00:08:26,680 --> 00:08:28,920 Speaker 2: should be buyable and tradable, and you should be able 166 00:08:28,920 --> 00:08:30,120 Speaker 2: to do so without scrutiny. 167 00:08:30,360 --> 00:08:32,080 Speaker 1: So it seems like there was a bit of distrust 168 00:08:32,080 --> 00:08:33,480 Speaker 1: on the part of the public and then a bit 169 00:08:33,480 --> 00:08:36,040 Speaker 1: of distrust on the part of the companies buying the offsets. 170 00:08:36,120 --> 00:08:39,480 Speaker 1: And that then brings me to well direct air capture, 171 00:08:39,559 --> 00:08:41,920 Speaker 1: because I'm thinking about the fact that that has become 172 00:08:42,000 --> 00:08:44,760 Speaker 1: a more popular technology with more money flowing into it 173 00:08:44,840 --> 00:08:47,040 Speaker 1: over the course of the last year. And it's essentially, 174 00:08:47,400 --> 00:08:49,600 Speaker 1: and you can listen to our back catalog, there's essentially 175 00:08:49,640 --> 00:08:51,680 Speaker 1: a machine that is sucking carbon out of the air 176 00:08:51,720 --> 00:08:54,480 Speaker 1: and doing the sorts of things that trees do, but 177 00:08:54,640 --> 00:08:57,480 Speaker 1: it's a machine. And the question I have for the 178 00:08:57,480 --> 00:08:59,880 Speaker 1: two of you, as people who spend your time focused 179 00:08:59,920 --> 00:09:02,680 Speaker 1: on carbon offsets, do you think that direct air capture 180 00:09:02,679 --> 00:09:06,880 Speaker 1: has become popular because of this accounting issue essentially that 181 00:09:06,960 --> 00:09:09,120 Speaker 1: you've brought up, which has to do with the fact 182 00:09:09,160 --> 00:09:11,400 Speaker 1: that it's difficult to actually come up with the math 183 00:09:11,640 --> 00:09:15,640 Speaker 1: of how impactful a forestry project actually. Is there any 184 00:09:15,679 --> 00:09:18,880 Speaker 1: other project that's in a nature based solution category or 185 00:09:18,920 --> 00:09:23,000 Speaker 1: do you think it's direct air capture? And the things 186 00:09:23,040 --> 00:09:26,840 Speaker 1: that we are already doing from a nature based solutions universe. 187 00:09:26,880 --> 00:09:29,160 Speaker 1: And then that's really what you're seeing from companies when 188 00:09:29,160 --> 00:09:30,400 Speaker 1: it comes to their interest. 189 00:09:30,800 --> 00:09:34,520 Speaker 2: It's definitely a end question rather than an or question. 190 00:09:34,679 --> 00:09:36,640 Speaker 2: So you're going to need all of the tools in 191 00:09:36,679 --> 00:09:39,240 Speaker 2: the toolkit, or companies are going to need all the 192 00:09:39,280 --> 00:09:41,680 Speaker 2: tools in the toolkit to achieve their net zero targets. 193 00:09:41,720 --> 00:09:44,160 Speaker 2: They're going to need nature based solutions, they're going to 194 00:09:44,160 --> 00:09:47,240 Speaker 2: need technology based removal, they're going to need carbon avoidance, 195 00:09:47,280 --> 00:09:49,680 Speaker 2: they'll need carbon removal. Everything is going to play a 196 00:09:49,760 --> 00:09:51,880 Speaker 2: very important role. And what's important to note, and I 197 00:09:51,920 --> 00:09:54,520 Speaker 2: think a lot of people don't necessarily connect these dots 198 00:09:54,559 --> 00:09:57,920 Speaker 2: when they think about the interoperability of these different solutions, 199 00:09:58,000 --> 00:10:01,240 Speaker 2: is that the primary vehicle for finance direct air capture 200 00:10:01,760 --> 00:10:04,320 Speaker 2: is and will continue to be carbon credits, and the 201 00:10:04,400 --> 00:10:06,760 Speaker 2: primary source of that financing is going to come from 202 00:10:06,800 --> 00:10:10,240 Speaker 2: corporate buyers. And so BNF's current estimates put the cost 203 00:10:10,280 --> 00:10:13,360 Speaker 2: of direct air capture today at around eleven hundred dollars 204 00:10:13,440 --> 00:10:16,160 Speaker 2: a ton on average, which is incredibly expensive. Right to 205 00:10:16,160 --> 00:10:18,599 Speaker 2: give you a sense of scale, the average price or 206 00:10:18,640 --> 00:10:21,240 Speaker 2: the average cost of creating a carbon credit in nature 207 00:10:21,240 --> 00:10:24,720 Speaker 2: based solutions is anywhere from five to fifteen dollars a ton. 208 00:10:24,840 --> 00:10:28,320 Speaker 2: So direct air capture is prohibitively expensive for most companies today. 209 00:10:28,360 --> 00:10:30,040 Speaker 2: But what you're starting to see is some of these 210 00:10:30,080 --> 00:10:33,640 Speaker 2: more inelastic companies, these companies with higher profit margins and 211 00:10:33,679 --> 00:10:37,920 Speaker 2: lower emissions, like Microsoft, like pharmaceutical companies. These companies are 212 00:10:37,960 --> 00:10:41,600 Speaker 2: going out and they're signing forward looking contracts to guarantee 213 00:10:41,920 --> 00:10:44,760 Speaker 2: a procurement of direct air capture credits over the next ten, 214 00:10:44,880 --> 00:10:47,280 Speaker 2: twenty thirty years. And what that's doing is it's allowing 215 00:10:47,280 --> 00:10:50,160 Speaker 2: a project to be bankable data. We've spoken on prior 216 00:10:50,240 --> 00:10:53,560 Speaker 2: podcasts about corporate clean energy power purchase agreements. This is 217 00:10:53,559 --> 00:10:55,960 Speaker 2: a very similar type of structure, and what it's going 218 00:10:55,960 --> 00:10:57,920 Speaker 2: to do over time is it should hopefully bring the 219 00:10:58,000 --> 00:11:00,400 Speaker 2: cost down for direct air capture, but all so other 220 00:11:00,480 --> 00:11:04,160 Speaker 2: technology based removals like bio energy, carbon capture and storage, 221 00:11:04,200 --> 00:11:06,920 Speaker 2: and that should make it more approachable or easier for 222 00:11:07,000 --> 00:11:09,080 Speaker 2: other companies to get involved in this space at a 223 00:11:09,080 --> 00:11:11,880 Speaker 2: lower price point. And so, going back to your original question, 224 00:11:11,920 --> 00:11:14,600 Speaker 2: it's definitely an end question rather than an ore. 225 00:11:15,040 --> 00:11:17,600 Speaker 4: But to add to all of that is, because of 226 00:11:17,679 --> 00:11:21,200 Speaker 4: the emergence of direct air capture and buyers in general 227 00:11:21,559 --> 00:11:24,599 Speaker 4: just throwing a lot of money into tech based removals. 228 00:11:24,640 --> 00:11:27,719 Speaker 4: We're seeing similar buyers throw a lot of money into 229 00:11:27,880 --> 00:11:31,640 Speaker 4: nature based removals, so you see them being valued because 230 00:11:31,679 --> 00:11:34,960 Speaker 4: of their additional benefits beyond decarbonization. And that goes back 231 00:11:34,960 --> 00:11:38,000 Speaker 4: to the end that Kyle was talking about, is that, yes, 232 00:11:38,160 --> 00:11:40,720 Speaker 4: we can benefit from tech based removals because you can 233 00:11:40,760 --> 00:11:43,720 Speaker 4: count those emissions and you can actively see and feel 234 00:11:43,800 --> 00:11:47,520 Speaker 4: where that carbon production is going. But you can't also 235 00:11:47,840 --> 00:11:51,360 Speaker 4: discredit the need for nature based solutions. So deforestation is 236 00:11:51,360 --> 00:11:54,520 Speaker 4: still a risk, and avoided deforestation projects address that risk, 237 00:11:54,600 --> 00:11:57,800 Speaker 4: but they also come with benefits for preserving biodiversity and 238 00:11:58,000 --> 00:12:01,640 Speaker 4: creating sustainable jobs for indigenous communities. So it all comes 239 00:12:01,679 --> 00:12:05,079 Speaker 4: down to us doing our due diligence, but also mobilizing 240 00:12:05,200 --> 00:12:10,000 Speaker 4: investment into high integrity and high quality projects on both ends. 241 00:12:10,440 --> 00:12:13,160 Speaker 1: So now, twenty twenty three saw a number of carbon 242 00:12:13,240 --> 00:12:16,680 Speaker 1: offset retirements. Can you explain first of all, what a 243 00:12:16,720 --> 00:12:19,760 Speaker 1: retirement is in this space and then secondly, really what 244 00:12:19,800 --> 00:12:21,880 Speaker 1: the magnitude of it was when we look back at 245 00:12:21,880 --> 00:12:23,080 Speaker 1: this year that's just gone by. 246 00:12:23,440 --> 00:12:28,520 Speaker 4: A retirement is when an offset buyer purchases that offset, 247 00:12:28,559 --> 00:12:32,319 Speaker 4: but also cancels it. So for an offset to be retired, 248 00:12:32,440 --> 00:12:35,720 Speaker 4: it means that it's no longer circulating in the market. 249 00:12:35,920 --> 00:12:38,640 Speaker 4: I can't pick that offset again and use it. If 250 00:12:38,679 --> 00:12:41,160 Speaker 4: I was let's say Shell, and I bought one million 251 00:12:41,160 --> 00:12:44,320 Speaker 4: tons of CO two in offset. Now they count towards 252 00:12:44,320 --> 00:12:47,680 Speaker 4: my own emission reduction goals. Some companies can buy those 253 00:12:47,760 --> 00:12:50,840 Speaker 4: offsets and choose not to retire them. They could maybe 254 00:12:51,040 --> 00:12:54,040 Speaker 4: retire it later, maybe trade it at a higher price, 255 00:12:54,320 --> 00:12:56,520 Speaker 4: and so on. So that is what a retirement is, 256 00:12:56,520 --> 00:12:58,240 Speaker 4: is that you buy it, you cancel it, and then 257 00:12:58,280 --> 00:13:01,480 Speaker 4: it counts towards your own emission reduction. In twenty twenty three, 258 00:13:01,520 --> 00:13:04,679 Speaker 4: it was actually a turbulent year, so when we started 259 00:13:04,800 --> 00:13:08,319 Speaker 4: off demand levels were suppressed when you compare to twenty 260 00:13:08,320 --> 00:13:11,520 Speaker 4: twenty two, but then it's picked up massively towards the end, 261 00:13:11,559 --> 00:13:14,840 Speaker 4: and we saw around thirty seven million offsets retired in 262 00:13:14,880 --> 00:13:18,440 Speaker 4: December versus the fifteen that we saw month on month 263 00:13:18,520 --> 00:13:20,720 Speaker 4: earlier in the year. And there at Broughte it up 264 00:13:20,760 --> 00:13:23,880 Speaker 4: to around one hundred and sixty four million officets retired, 265 00:13:24,000 --> 00:13:27,040 Speaker 4: and it's a six percent increase from the previous year, 266 00:13:27,080 --> 00:13:28,520 Speaker 4: and it's a record year again. 267 00:13:28,760 --> 00:13:30,840 Speaker 1: So let's talk a little bit more then about where 268 00:13:30,880 --> 00:13:34,080 Speaker 1: the demand for this is actually coming from. And I 269 00:13:34,120 --> 00:13:36,200 Speaker 1: want to start with you've already mentioned actually a couple 270 00:13:36,280 --> 00:13:40,960 Speaker 1: of different companies. Are there specific industries you'd mentioned airlines, 271 00:13:41,000 --> 00:13:42,960 Speaker 1: you mentioned oil on gas. Is it the hard to 272 00:13:43,000 --> 00:13:45,600 Speaker 1: abate space that's really looking at this because they don't 273 00:13:45,600 --> 00:13:48,840 Speaker 1: have a clear path decarbonization or are there simply trends 274 00:13:48,840 --> 00:13:51,559 Speaker 1: that can't be explained? Really? Where is the demand coming from? 275 00:13:51,920 --> 00:13:55,200 Speaker 2: The short answer data is that every single sector is 276 00:13:55,240 --> 00:13:57,840 Speaker 2: going to need carbon credits in order to get to 277 00:13:57,880 --> 00:14:00,680 Speaker 2: net zero. Companies can be as aggressive as they want 278 00:14:00,720 --> 00:14:03,600 Speaker 2: in reducing their own gross emissions, but if they're serious 279 00:14:03,640 --> 00:14:06,160 Speaker 2: about making a net zero claim, there's always going to 280 00:14:06,200 --> 00:14:09,040 Speaker 2: be residual emissions somewhere along their value chain that they'll 281 00:14:09,080 --> 00:14:11,800 Speaker 2: need to neutralize. Right, that's the itch that they can't scratch. 282 00:14:11,960 --> 00:14:15,120 Speaker 2: If you look specifically at retirement activity today, while you 283 00:14:15,160 --> 00:14:17,800 Speaker 2: are seeing it across pretty much every sector, there is 284 00:14:17,840 --> 00:14:21,640 Speaker 2: a much more emphasis from oil and gas companies, from airlines, 285 00:14:22,040 --> 00:14:24,480 Speaker 2: and from technology companies as well. But the types of 286 00:14:24,560 --> 00:14:27,400 Speaker 2: credits that these different sectors are buying very significantly, and 287 00:14:27,440 --> 00:14:29,520 Speaker 2: we've kind of gotten at this a little bit already. Today, 288 00:14:29,600 --> 00:14:33,880 Speaker 2: those companies with perhaps lower profit margins but much higher emissions, 289 00:14:33,920 --> 00:14:36,640 Speaker 2: those airlines, for example, they can really only afford to 290 00:14:36,680 --> 00:14:39,720 Speaker 2: purchase cheaper carbon credits. In most cases they're going to 291 00:14:39,760 --> 00:14:42,080 Speaker 2: pass that cost on to customers, and so as a result, 292 00:14:42,080 --> 00:14:44,240 Speaker 2: they need to buy carbon credits that are five dollars 293 00:14:44,240 --> 00:14:46,640 Speaker 2: a ton, four dollars a ton, or even cheaper, and 294 00:14:46,680 --> 00:14:49,000 Speaker 2: that's why companies have gotten scrutiny in the past. You 295 00:14:49,080 --> 00:14:51,600 Speaker 2: see very similar trends from the oil and gas sector, 296 00:14:51,680 --> 00:14:54,520 Speaker 2: although the quality of the credits are purchasing are slightly higher. 297 00:14:54,600 --> 00:14:57,280 Speaker 2: So Shell was the largest buyer of carbon credits in 298 00:14:57,320 --> 00:14:59,640 Speaker 2: twenty twenty three, it's off to a very hot start 299 00:14:59,640 --> 00:15:01,920 Speaker 2: in twenty four as well, and it's buying a whole 300 00:15:02,040 --> 00:15:05,720 Speaker 2: range of carbon credits from energy generation projects to nature 301 00:15:05,760 --> 00:15:09,680 Speaker 2: based solutions across Latin America, Sub Saharan Africa and Southeast Asia. 302 00:15:09,720 --> 00:15:11,400 Speaker 2: And then on the other end of the spectrum you 303 00:15:11,480 --> 00:15:14,320 Speaker 2: have the technology companies, the ones with those higher profit 304 00:15:14,360 --> 00:15:17,160 Speaker 2: margins that will require less carbon credits in order to 305 00:15:17,200 --> 00:15:19,640 Speaker 2: get to net zero, and these companies are really making 306 00:15:19,720 --> 00:15:23,640 Speaker 2: those big icebreaker investments into technology based removal and I 307 00:15:23,680 --> 00:15:27,200 Speaker 2: would specifically highlight Microsoft as a leader here. Microsoft has 308 00:15:27,200 --> 00:15:30,160 Speaker 2: signed a whole slew of deals ranging from direct air 309 00:15:30,200 --> 00:15:33,880 Speaker 2: capture to enhanced weathering to biochar in order to diversify 310 00:15:33,920 --> 00:15:35,960 Speaker 2: its portfolio to neutralize those emissions. 311 00:15:36,360 --> 00:15:38,760 Speaker 1: The different types of offsets that you just mentioned are 312 00:15:38,800 --> 00:15:41,600 Speaker 1: actually things that have been coming up more recently, and 313 00:15:41,720 --> 00:15:43,640 Speaker 1: I'm even thinking about you know, each year we do 314 00:15:43,840 --> 00:15:46,800 Speaker 1: our Pioneers program where we look at a couple of 315 00:15:46,920 --> 00:15:50,200 Speaker 1: companies that will actually several companies that are attacking a 316 00:15:50,240 --> 00:15:54,320 Speaker 1: certain part of the energy transition and decarbonization that needs 317 00:15:54,320 --> 00:15:56,680 Speaker 1: to be addressed. And within one of the previous years, 318 00:15:56,680 --> 00:15:58,680 Speaker 1: one of the winners was a biochart company, so we 319 00:15:58,760 --> 00:16:01,360 Speaker 1: got very familiar with that here at BNF. And I 320 00:16:01,400 --> 00:16:05,240 Speaker 1: think I saw my first biotar in person at kop 321 00:16:05,400 --> 00:16:08,000 Speaker 1: in Dubai last year because they had set up an 322 00:16:08,080 --> 00:16:11,240 Speaker 1: area where you could actually see some of the agriculture 323 00:16:11,360 --> 00:16:14,560 Speaker 1: solutions that actually were there. So they actually look a 324 00:16:14,560 --> 00:16:17,720 Speaker 1: little bit like rabbit pellets. I want to say, they're 325 00:16:17,840 --> 00:16:20,280 Speaker 1: quite tiny. I thought they would be bigger discs, but 326 00:16:20,720 --> 00:16:23,280 Speaker 1: you know, there we are. Okay, So we've talked about 327 00:16:23,520 --> 00:16:26,160 Speaker 1: the demand side of things, let's talk a little bit 328 00:16:26,160 --> 00:16:28,320 Speaker 1: about supply, because you know you've come on the show 329 00:16:28,360 --> 00:16:31,240 Speaker 1: and passed and talked about renoal Ble energy credits. What 330 00:16:31,400 --> 00:16:33,880 Speaker 1: is popular at the moment, What has been popular in 331 00:16:33,920 --> 00:16:34,880 Speaker 1: this last year. 332 00:16:35,040 --> 00:16:38,160 Speaker 4: Well, the two main sectors that have always been popular 333 00:16:38,360 --> 00:16:40,960 Speaker 4: and we see demand rising in them a lot is 334 00:16:41,160 --> 00:16:44,720 Speaker 4: energy generation and avoided deforestation. There are mainly two reasons 335 00:16:44,800 --> 00:16:48,080 Speaker 4: for that release. So energy generation projects are abundant and 336 00:16:48,120 --> 00:16:51,120 Speaker 4: they're cheap, so they're low hanging fruit for buyers that 337 00:16:51,200 --> 00:16:55,280 Speaker 4: want to offset before regulation and standardization kicks on. Avoided 338 00:16:55,280 --> 00:16:59,000 Speaker 4: deforestation also is one of the more popular ones. They 339 00:16:59,040 --> 00:17:02,480 Speaker 4: also come with what we mentioned before, the additional benefits 340 00:17:02,480 --> 00:17:06,600 Speaker 4: beyond decarbonization, and depending on where that project is, it 341 00:17:06,720 --> 00:17:09,919 Speaker 4: also could be very cheap. But usually for companies that 342 00:17:09,960 --> 00:17:12,920 Speaker 4: are opting for a more of like a higher quality ones, 343 00:17:12,960 --> 00:17:16,000 Speaker 4: they would go for avoided deforestation because it signature based 344 00:17:16,040 --> 00:17:18,280 Speaker 4: solution and there's a more of a story to tell 345 00:17:18,320 --> 00:17:21,439 Speaker 4: behind those offsets. So those two have been mainly the 346 00:17:21,480 --> 00:17:24,840 Speaker 4: ones that are supplying the market and demand is mainly 347 00:17:24,880 --> 00:17:27,320 Speaker 4: coming from there. But there are other sectors that are 348 00:17:27,320 --> 00:17:29,560 Speaker 4: emerging and they're growing, and we saw that a lot 349 00:17:29,600 --> 00:17:32,560 Speaker 4: between twenty twenty two and twenty twenty three, sectors such 350 00:17:32,560 --> 00:17:36,680 Speaker 4: as energy demand and it's mostly of projects to install 351 00:17:36,880 --> 00:17:41,320 Speaker 4: clean cook stoves in Africa, for example, and emissions projects 352 00:17:41,359 --> 00:17:45,160 Speaker 4: and those are ones that reduce industrial emissions and they 353 00:17:45,160 --> 00:17:47,720 Speaker 4: were very prominent in the US right now. It's a 354 00:17:47,720 --> 00:17:51,760 Speaker 4: whole range of sectors, but it's also interesting to look 355 00:17:51,840 --> 00:17:56,040 Speaker 4: at the geographic differences, so which sectors are more popular 356 00:17:56,240 --> 00:18:00,280 Speaker 4: in which regions. But overall, up until now, we see 357 00:18:00,359 --> 00:18:03,960 Speaker 4: most of the supply coming from Asia, Latin America and Africa, 358 00:18:04,080 --> 00:18:06,639 Speaker 4: and most of the demand coming from the US and 359 00:18:06,680 --> 00:18:10,080 Speaker 4: so North America and Europe. And that dichotomy between supply 360 00:18:10,160 --> 00:18:13,080 Speaker 4: and demand did spur something in the market over the 361 00:18:13,119 --> 00:18:17,239 Speaker 4: past year and made governments aware of the economic but 362 00:18:17,280 --> 00:18:21,879 Speaker 4: also geopolitical benefits of sitting on potential to have a 363 00:18:22,000 --> 00:18:25,440 Speaker 4: huge carbon offset market. So we saw more policy updates 364 00:18:25,520 --> 00:18:28,280 Speaker 4: going on there, especially around Zimbabwe when they wanted to 365 00:18:28,560 --> 00:18:31,480 Speaker 4: reap some of the benefits of carbon offsets and capitalize 366 00:18:31,520 --> 00:18:34,440 Speaker 4: on their own forestry projects, and we saw other African 367 00:18:34,480 --> 00:18:37,439 Speaker 4: countries do the same, depending on the sectors that they 368 00:18:37,480 --> 00:18:37,800 Speaker 4: sit on. 369 00:18:38,119 --> 00:18:41,160 Speaker 2: Yeah, and I would just say one kind of unifying 370 00:18:41,160 --> 00:18:44,560 Speaker 2: factor amount all the sectors that Laylor just mentioned is 371 00:18:44,560 --> 00:18:48,000 Speaker 2: that the creation of credits from those sectors is almost instantaneous. 372 00:18:48,119 --> 00:18:51,200 Speaker 2: Right a sector like reforestation, for example, you can make 373 00:18:51,200 --> 00:18:54,160 Speaker 2: an investment in a reforestation project today, but you might 374 00:18:54,200 --> 00:18:57,399 Speaker 2: not see those credits materialize for several decades because you 375 00:18:57,400 --> 00:18:59,720 Speaker 2: need time for that forest to mature after you've planted 376 00:18:59,720 --> 00:19:04,040 Speaker 2: those But sectors like avoided deforestation, like energy generation, those 377 00:19:04,080 --> 00:19:08,240 Speaker 2: projects either exist today, which does bring up questions around additionality. 378 00:19:08,520 --> 00:19:11,280 Speaker 2: But in the case of avoided deforestation, it's about using 379 00:19:11,280 --> 00:19:13,920 Speaker 2: that investment to protect an at risk forest and as 380 00:19:13,920 --> 00:19:16,560 Speaker 2: a result, those trees can continue to sequest your carbon, 381 00:19:16,600 --> 00:19:19,480 Speaker 2: and so it's an instantaneous delivery of credits that's been 382 00:19:19,520 --> 00:19:22,080 Speaker 2: really popular with companies and that's why supply in these 383 00:19:22,080 --> 00:19:24,040 Speaker 2: sectors is much higher. And at the same time, that 384 00:19:24,160 --> 00:19:26,760 Speaker 2: is why some of these governments are implementing these what 385 00:19:26,800 --> 00:19:30,000 Speaker 2: we would call carbon nationalism policies to take advantage of 386 00:19:30,000 --> 00:19:32,120 Speaker 2: investment into these instantaneous sectors. 387 00:19:32,359 --> 00:19:34,199 Speaker 1: So thank you for getting me up to date on 388 00:19:34,359 --> 00:19:37,679 Speaker 1: really what's transpired since we last spoke on this show. 389 00:19:37,760 --> 00:19:41,160 Speaker 1: So now let's look into the future. We recently published 390 00:19:41,200 --> 00:19:45,359 Speaker 1: a long term carbon offsets outlook, and we actually broke 391 00:19:45,359 --> 00:19:48,000 Speaker 1: it down into different possible scenarios for us to really 392 00:19:48,040 --> 00:19:51,399 Speaker 1: think about where this market could go. Let's go into 393 00:19:51,400 --> 00:19:53,960 Speaker 1: those scenarios. So let's start with I mean, I don't know, 394 00:19:54,000 --> 00:19:55,560 Speaker 1: do we start with the good news or the bad news. 395 00:19:55,600 --> 00:19:57,440 Speaker 1: Let's start with the good news, which is the high 396 00:19:57,560 --> 00:20:00,679 Speaker 1: quality scenario. What does that really tell tell us about 397 00:20:00,720 --> 00:20:04,800 Speaker 1: what could happen in the voluntary carbon space and what 398 00:20:04,840 --> 00:20:07,280 Speaker 1: would need to happen in order for this scenario to 399 00:20:07,400 --> 00:20:07,840 Speaker 1: be true? 400 00:20:08,160 --> 00:20:10,080 Speaker 2: I can jump in here. What we've done is we've 401 00:20:10,400 --> 00:20:13,520 Speaker 2: highlighted three what we would call benchmark scenarios, and we 402 00:20:13,560 --> 00:20:16,080 Speaker 2: think these are the three most likely scenarios that can 403 00:20:16,119 --> 00:20:17,800 Speaker 2: occur in the market. And we've gone ahead and then 404 00:20:17,840 --> 00:20:20,600 Speaker 2: we've ranked these benchmark scenarios in terms of likelihood. And 405 00:20:21,119 --> 00:20:24,239 Speaker 2: as Layla's kind of gotten over the call, today, we 406 00:20:24,280 --> 00:20:26,280 Speaker 2: are at a crossroads in the market. There's a lot 407 00:20:26,320 --> 00:20:28,800 Speaker 2: of integrity initiatives, there's a lot of registries that are 408 00:20:28,800 --> 00:20:32,280 Speaker 2: trying to standardize efforts to define what a good high 409 00:20:32,359 --> 00:20:35,240 Speaker 2: quality offset looks like and the likelihood of that occurring. 410 00:20:35,560 --> 00:20:38,160 Speaker 2: You know, I think it's really a coin flip right now. 411 00:20:38,240 --> 00:20:40,879 Speaker 2: If those integrity initiatives were to fail, you kind of 412 00:20:40,920 --> 00:20:43,479 Speaker 2: have a doomsday scenario for what this market can look like. 413 00:20:43,960 --> 00:20:45,879 Speaker 2: We can definitely talk about that later on, but if 414 00:20:45,880 --> 00:20:48,600 Speaker 2: they're successful, what we think it could create is a 415 00:20:48,760 --> 00:20:52,040 Speaker 2: high quality carbon offset market where every single credit it 416 00:20:52,080 --> 00:20:55,159 Speaker 2: doesn't matter whether it avoids or removes emissions, it doesn't 417 00:20:55,160 --> 00:20:57,960 Speaker 2: matter whether it's nature based or technology based. So long 418 00:20:58,000 --> 00:21:00,480 Speaker 2: as it's over a certain threshold in terms of meeting 419 00:21:00,480 --> 00:21:03,800 Speaker 2: that additionality, that permanence, and that measurability, it's going to 420 00:21:03,800 --> 00:21:06,160 Speaker 2: be considered high quality. And what we said is that 421 00:21:06,280 --> 00:21:08,440 Speaker 2: in our long term outlook, if you create this high 422 00:21:08,520 --> 00:21:11,800 Speaker 2: quality market, demand for carbon credits would be much more 423 00:21:11,840 --> 00:21:14,600 Speaker 2: what we call inelastic, So companies would be willing to 424 00:21:14,640 --> 00:21:17,400 Speaker 2: buy carbon credits regardless of their price, and they would 425 00:21:17,440 --> 00:21:20,920 Speaker 2: form a very legitimate, reliable backstop in order for companies 426 00:21:20,920 --> 00:21:22,720 Speaker 2: to get to net zero. And so in this high 427 00:21:22,800 --> 00:21:25,800 Speaker 2: quality market, we estimate that carbonof set demand would reach 428 00:21:25,920 --> 00:21:29,400 Speaker 2: five point nine billion metric tons of carbon dioxide equivalent 429 00:21:29,440 --> 00:21:32,920 Speaker 2: on an annual basis in twenty fifty, so significant growth 430 00:21:33,160 --> 00:21:35,480 Speaker 2: from what we see today, and what that would ultimately 431 00:21:35,560 --> 00:21:37,520 Speaker 2: lead to is much higher prices in the long run, 432 00:21:37,560 --> 00:21:40,640 Speaker 2: So carbonof set prices in this high quality market would 433 00:21:40,640 --> 00:21:43,080 Speaker 2: peak at over two hundred and forty dollars a ton 434 00:21:43,160 --> 00:21:46,439 Speaker 2: in the twenty forties, which is a huge investment signal. Right, 435 00:21:46,440 --> 00:21:50,880 Speaker 2: there's a tremendous amount of opportunity for project developers, for investors, 436 00:21:50,920 --> 00:21:53,239 Speaker 2: for policy makers, and then as a buyer, you need 437 00:21:53,280 --> 00:21:55,360 Speaker 2: to be aware of these price rises as well. That 438 00:21:55,680 --> 00:21:58,200 Speaker 2: gets you thinking should I hedge against this price rise 439 00:21:58,240 --> 00:22:01,040 Speaker 2: today and lock into long term contracts in the near 440 00:22:01,080 --> 00:22:03,960 Speaker 2: future at potentially cheaper prices. And so we think that 441 00:22:04,000 --> 00:22:06,560 Speaker 2: this is a very realistic outcome for where this market 442 00:22:06,600 --> 00:22:06,879 Speaker 2: could go. 443 00:22:07,080 --> 00:22:09,640 Speaker 1: I mean, this is essentially the scenario where we move 444 00:22:09,680 --> 00:22:12,760 Speaker 1: beyond greenwashing and we get to a place where we 445 00:22:12,800 --> 00:22:15,400 Speaker 1: can verify all of the credits and it's really more 446 00:22:15,440 --> 00:22:17,720 Speaker 1: about the market than about what's. 447 00:22:17,520 --> 00:22:21,960 Speaker 2: Actually in it, exactly. That's exactly how I would define it. Really. 448 00:22:22,000 --> 00:22:23,960 Speaker 2: We think the biggest factor and where we put the 449 00:22:23,960 --> 00:22:26,439 Speaker 2: most emphasis in this year's long term out look is 450 00:22:26,480 --> 00:22:29,680 Speaker 2: around carbonovs at demand, right, and we say, as demand goes, 451 00:22:29,720 --> 00:22:32,360 Speaker 2: that's where the market's going to go. If demand falters, 452 00:22:32,400 --> 00:22:35,240 Speaker 2: the market will folter. If demand surges, the market will 453 00:22:35,240 --> 00:22:38,439 Speaker 2: search but really whether or not that demand rises or 454 00:22:38,480 --> 00:22:40,280 Speaker 2: falls is going to depend on whether or not they 455 00:22:40,280 --> 00:22:43,080 Speaker 2: can buy high quality credits. And at a certain point, 456 00:22:43,160 --> 00:22:46,720 Speaker 2: when you have demand exceeding billions of tons of carbon 457 00:22:46,720 --> 00:22:49,480 Speaker 2: dioxide on an annual basis, companies are not going to 458 00:22:49,520 --> 00:22:52,480 Speaker 2: have the time to suss out specific projects and figure 459 00:22:52,480 --> 00:22:54,840 Speaker 2: out well, that's good quality and that's bad quality, or 460 00:22:54,840 --> 00:22:57,040 Speaker 2: that one has certain co benefits and that one doesn't. 461 00:22:57,119 --> 00:22:59,280 Speaker 2: What they need is a bar, and if a project 462 00:22:59,320 --> 00:23:02,040 Speaker 2: is above that bar, it's good to buy no strings attached. 463 00:23:02,520 --> 00:23:04,560 Speaker 2: And that's really where we think a high quality market 464 00:23:04,600 --> 00:23:07,159 Speaker 2: can get to if these integrity initiatives are successful. 465 00:23:07,400 --> 00:23:10,679 Speaker 1: So let's go to another extreme. Let's talk about the 466 00:23:10,840 --> 00:23:13,760 Speaker 1: removal only scenario. What does that mean. 467 00:23:14,200 --> 00:23:18,240 Speaker 4: A removal's only scenario is a voluntary market where we 468 00:23:18,400 --> 00:23:22,240 Speaker 4: only see offsets that come from projects that rely on 469 00:23:22,359 --> 00:23:25,639 Speaker 4: removing carbon dioxide from the air. Now, this can be 470 00:23:25,720 --> 00:23:28,320 Speaker 4: in the form of technology based removals. It can also 471 00:23:28,440 --> 00:23:31,160 Speaker 4: be in the form of nature based removals. They both 472 00:23:31,200 --> 00:23:34,400 Speaker 4: play a role and they come in at different times 473 00:23:34,440 --> 00:23:37,960 Speaker 4: depending on my supply and demand dynamics. Really, but in 474 00:23:38,000 --> 00:23:41,160 Speaker 4: a removals only scenario, what we see is that prices 475 00:23:41,160 --> 00:23:45,280 Speaker 4: will rise to unsustainable levels, exceeding two hundred and four 476 00:23:45,320 --> 00:23:48,359 Speaker 4: dollars per ton in twenty forty, and they reach around 477 00:23:48,359 --> 00:23:51,560 Speaker 4: one hundred and seventy two dollars per ton in twenty fifty. 478 00:23:51,760 --> 00:23:56,040 Speaker 4: So such high prices could risk companies not meeting their 479 00:23:56,080 --> 00:23:59,879 Speaker 4: net zero targets. But also the limited supply raises the 480 00:24:00,080 --> 00:24:05,560 Speaker 4: question of can we sustain ourselves with only removal based offsets. 481 00:24:05,080 --> 00:24:07,040 Speaker 1: And what do you mean by sustain ourselves? 482 00:24:07,320 --> 00:24:10,840 Speaker 4: Supply would be quite limited. So right now, most of 483 00:24:10,880 --> 00:24:14,560 Speaker 4: the carbon offset market comes from avoidance credits, so the 484 00:24:14,600 --> 00:24:17,680 Speaker 4: forestry ones and the energy generation they make up more 485 00:24:17,680 --> 00:24:21,160 Speaker 4: than seventy eighty percent of the market. In a removal's 486 00:24:21,200 --> 00:24:24,200 Speaker 4: only scenario, we're cutting all of that down and they're 487 00:24:24,280 --> 00:24:26,440 Speaker 4: just going to be shut down, all of these projects, 488 00:24:26,520 --> 00:24:30,920 Speaker 4: and we will only have the removal ones, so reforestation, agriculture, 489 00:24:30,960 --> 00:24:33,240 Speaker 4: and a tech based one like direct air capture and 490 00:24:33,280 --> 00:24:36,560 Speaker 4: bio energy with carbon capture and storage. And that is 491 00:24:36,560 --> 00:24:40,240 Speaker 4: a quite limited amount relative to how much we actually need. 492 00:24:40,440 --> 00:24:44,400 Speaker 4: But in that scenario, what we think companies will do 493 00:24:44,560 --> 00:24:48,919 Speaker 4: is that they will pit those offsets against other decarbonization strategies. 494 00:24:48,960 --> 00:24:51,359 Speaker 4: So now we've got the quality issue out the window, 495 00:24:51,520 --> 00:24:55,680 Speaker 4: and they will be comparable to other decarbonization alternatives, and 496 00:24:56,000 --> 00:24:58,720 Speaker 4: the way companies will opt for them is on a 497 00:24:58,960 --> 00:25:03,480 Speaker 4: least cost basis, So that's the least cost decarbonization demand outlook, 498 00:25:03,680 --> 00:25:07,199 Speaker 4: and they'll be competing with clean energy, for example, or 499 00:25:07,240 --> 00:25:10,800 Speaker 4: electrifying transport at different times of the scenario. 500 00:25:11,000 --> 00:25:13,400 Speaker 2: And to elaborate that on that a little bit more, 501 00:25:13,440 --> 00:25:16,560 Speaker 2: there's this big question that always gets asked in the 502 00:25:16,600 --> 00:25:19,000 Speaker 2: voluntary carbon market, and is the question is is a 503 00:25:19,040 --> 00:25:21,879 Speaker 2: ton actually a ton? Right? If I buy a carbon 504 00:25:21,920 --> 00:25:24,679 Speaker 2: credit from an avoided deforestation project, does that have the 505 00:25:24,720 --> 00:25:27,960 Speaker 2: same impact, for example, as a corporation signing a power 506 00:25:28,000 --> 00:25:31,440 Speaker 2: purchase agreement or electrifying its vehicle fleet or doing something else. 507 00:25:31,520 --> 00:25:33,639 Speaker 2: And the answer in most cases is no, it's not 508 00:25:34,200 --> 00:25:36,920 Speaker 2: because of some of these quality questions that emerge in 509 00:25:36,960 --> 00:25:39,720 Speaker 2: the voluntary carbon market. What we did and the exercise 510 00:25:39,760 --> 00:25:42,120 Speaker 2: that we did in this removal only markets, we said, 511 00:25:42,160 --> 00:25:44,360 Speaker 2: a removal only market is the closest that we'll ever 512 00:25:44,440 --> 00:25:47,280 Speaker 2: get to a ton of carbon removed being equivalent to 513 00:25:47,359 --> 00:25:50,320 Speaker 2: a ton of carbon reduced by some other form of decarbonization. 514 00:25:50,720 --> 00:25:53,359 Speaker 2: And so what we did and Leila mentioned this before, 515 00:25:53,440 --> 00:25:56,560 Speaker 2: is we created marginal abatement cost curves for companies, and 516 00:25:56,600 --> 00:25:59,240 Speaker 2: we said, as a corporation, if you're trying to achieve 517 00:25:59,280 --> 00:26:01,240 Speaker 2: in that zero goal, you no longer need to take 518 00:26:01,280 --> 00:26:03,600 Speaker 2: the approach of reducing your emissions as much as you 519 00:26:03,640 --> 00:26:07,240 Speaker 2: can and then neutralizing any residual emissions with offsets. Could 520 00:26:07,240 --> 00:26:08,800 Speaker 2: we ever get to a world where you look at 521 00:26:08,800 --> 00:26:11,920 Speaker 2: your suite of options available and you prioritize those options 522 00:26:12,160 --> 00:26:14,679 Speaker 2: purely based on cost. So, as a company, if I 523 00:26:14,680 --> 00:26:16,879 Speaker 2: set in at zero target for twenty fifty, and I 524 00:26:16,920 --> 00:26:19,080 Speaker 2: set it yesterday, for example, and then I look at 525 00:26:19,080 --> 00:26:21,640 Speaker 2: what's available, and the cheapest option is an offset, all 526 00:26:21,640 --> 00:26:24,600 Speaker 2: invest in offsets rather than buying clean energy, for example. 527 00:26:24,680 --> 00:26:27,640 Speaker 2: And this was a really interesting dynamic, and this changed 528 00:26:27,760 --> 00:26:31,120 Speaker 2: the outlook for carbon offset prices significantly. Leyla mentioned those 529 00:26:31,240 --> 00:26:33,920 Speaker 2: highs that you see in a carbon removal market, right, 530 00:26:33,960 --> 00:26:36,879 Speaker 2: But what's unique about this removal scenario is those price 531 00:26:36,960 --> 00:26:40,119 Speaker 2: rises come much earlier than that high quality scenario that 532 00:26:40,160 --> 00:26:42,399 Speaker 2: we talked about. Before they come in the next couple 533 00:26:42,400 --> 00:26:44,840 Speaker 2: of years, they come by twenty thirty because there's so 534 00:26:44,960 --> 00:26:47,720 Speaker 2: much early demand for carbon credits. Because they tend to 535 00:26:47,800 --> 00:26:50,879 Speaker 2: undercut other forms of decarbonization in terms of cost. So 536 00:26:50,920 --> 00:26:53,359 Speaker 2: I think that's really the key dynamic to keep in 537 00:26:53,400 --> 00:26:55,400 Speaker 2: mind here is that it would really change the way 538 00:26:55,440 --> 00:26:59,760 Speaker 2: that companies buy carbon credits if we prioritized strictly removals 539 00:27:00,040 --> 00:27:02,120 Speaker 2: in this market. And I think that's a very important 540 00:27:02,200 --> 00:27:05,239 Speaker 2: dynamic for companies to consider as they follow guidance from 541 00:27:05,280 --> 00:27:06,880 Speaker 2: initiatives like SPTI. 542 00:27:07,400 --> 00:27:11,880 Speaker 1: If we prioritize strictly removals and we're actually moving towards 543 00:27:11,960 --> 00:27:15,959 Speaker 1: a proper net zero by twenty fifty, would they're in 544 00:27:16,040 --> 00:27:20,520 Speaker 1: this scenario, be enough supply of this type of carbon 545 00:27:20,560 --> 00:27:23,280 Speaker 1: credit in order for it to actually work. 546 00:27:23,640 --> 00:27:26,680 Speaker 2: In early years? Definitely not right. So in early years, 547 00:27:26,680 --> 00:27:29,879 Speaker 2: as Leila mentioned, there was a massive reliance seventy to 548 00:27:29,920 --> 00:27:33,040 Speaker 2: eighty percent on carbon avoidance credits, and part of that, 549 00:27:33,080 --> 00:27:36,520 Speaker 2: again is their instantaneous nature. The readily available credits that 550 00:27:36,560 --> 00:27:39,720 Speaker 2: can be created the moment investment comes in. Technology based 551 00:27:39,720 --> 00:27:43,320 Speaker 2: removal is not readily available at scale yet. So I 552 00:27:43,359 --> 00:27:46,040 Speaker 2: mentioned those high costs for direct air capture, but supply 553 00:27:46,160 --> 00:27:48,440 Speaker 2: is also really low as well. You have the first 554 00:27:48,520 --> 00:27:52,040 Speaker 2: major pilot projects that are getting closer to commercialization, but 555 00:27:52,040 --> 00:27:54,159 Speaker 2: they're not even fully proven yet, and so what you 556 00:27:54,160 --> 00:27:56,760 Speaker 2: would run into in a removal only market is a 557 00:27:56,880 --> 00:27:59,880 Speaker 2: huge shortfall in supply in early years and supply would 558 00:27:59,920 --> 00:28:02,320 Speaker 2: have eventually catch up to demand in later years. But 559 00:28:02,400 --> 00:28:04,800 Speaker 2: that leaves a lot of question marks around the near term. 560 00:28:05,080 --> 00:28:07,080 Speaker 2: And so it does beg the question of do we 561 00:28:07,160 --> 00:28:09,520 Speaker 2: transition from one of these markets to another? Do we 562 00:28:09,600 --> 00:28:12,080 Speaker 2: start with a high quality market where you can buy 563 00:28:12,280 --> 00:28:15,080 Speaker 2: all types of credits, because again, we're going to need 564 00:28:15,240 --> 00:28:18,320 Speaker 2: every single available tool for companies to decarbonize, But then 565 00:28:18,400 --> 00:28:21,480 Speaker 2: slowly but surely, as costs come down and supply scales up, 566 00:28:21,520 --> 00:28:25,200 Speaker 2: do we transition more to technology based or nature based removals? 567 00:28:25,440 --> 00:28:27,199 Speaker 2: And I think that's what a lot of stakeholders in 568 00:28:27,200 --> 00:28:29,560 Speaker 2: this market are starting to lean towards in terms of 569 00:28:29,600 --> 00:28:31,200 Speaker 2: how they think this market should evolve. 570 00:28:31,359 --> 00:28:33,320 Speaker 1: And then that brings us to the middle of the 571 00:28:33,400 --> 00:28:36,439 Speaker 1: road scenario, which is essentially that the norm that we 572 00:28:36,560 --> 00:28:39,640 Speaker 1: currently are experiencing right now. But if we continue on 573 00:28:39,680 --> 00:28:42,040 Speaker 1: the path that we're on now, where does that lead prices? 574 00:28:42,240 --> 00:28:44,320 Speaker 1: And really what does that do to the future of 575 00:28:44,360 --> 00:28:44,920 Speaker 1: this market? 576 00:28:45,360 --> 00:28:49,120 Speaker 2: So I would refer to this scenario as less of 577 00:28:49,240 --> 00:28:50,880 Speaker 2: the middle of the road scenario. And more of the 578 00:28:51,120 --> 00:28:53,960 Speaker 2: doomsday scenario. If we continue on the path that we're 579 00:28:53,960 --> 00:28:56,280 Speaker 2: on today, if we continue to follow all the trends 580 00:28:56,320 --> 00:28:59,040 Speaker 2: that Leila and myself have mentioned that we saw in 581 00:28:59,080 --> 00:29:02,120 Speaker 2: twenty twenty three, this market is heading for failure and 582 00:29:02,200 --> 00:29:05,760 Speaker 2: most companies will clean miss their net zero targets. Right now, 583 00:29:05,880 --> 00:29:09,240 Speaker 2: the carbon offset market is heavily oversupplied, and that's supply. 584 00:29:09,320 --> 00:29:12,760 Speaker 2: There's a lot of questionable quality that populates that supply mix. 585 00:29:12,880 --> 00:29:15,800 Speaker 2: If that were to continue moving forward, we think demand 586 00:29:15,880 --> 00:29:18,280 Speaker 2: would be very different from those other scenarios and it 587 00:29:18,280 --> 00:29:21,640 Speaker 2: would be more elastic. And when we talk about elastic demand, 588 00:29:21,760 --> 00:29:24,680 Speaker 2: what that means is that as the scrutiny for purchasing 589 00:29:24,720 --> 00:29:28,000 Speaker 2: carbon credits increases and as the price increases, demand will 590 00:29:28,040 --> 00:29:31,040 Speaker 2: simply drop, especially for those sectors that we were talking 591 00:29:31,040 --> 00:29:34,280 Speaker 2: about earlier with lower profit margins and high emissions, So 592 00:29:34,320 --> 00:29:37,240 Speaker 2: those airlines, for example, those oil and gas companies. If 593 00:29:37,280 --> 00:29:40,200 Speaker 2: they need to purchase tens or even hundreds of millions 594 00:29:40,200 --> 00:29:42,680 Speaker 2: of carbon credits but they're going to get sued for greenwashing, 595 00:29:42,960 --> 00:29:45,280 Speaker 2: the simple answer is they'll stop buying and they'll abandon 596 00:29:45,320 --> 00:29:47,840 Speaker 2: their net zero goals. And that's a very realistic outcome 597 00:29:47,880 --> 00:29:50,760 Speaker 2: for where this market can head if these integrity initiatives 598 00:29:50,760 --> 00:29:52,920 Speaker 2: don't sort out some of these standardization issues. 599 00:29:53,240 --> 00:29:56,479 Speaker 4: And it's also important to mention that those prices of 600 00:29:56,480 --> 00:30:00,280 Speaker 4: offsets in that scenario will remain very, very low. So 601 00:30:00,520 --> 00:30:02,760 Speaker 4: in the other scenarios we spoke about them exceeding one 602 00:30:02,800 --> 00:30:06,120 Speaker 4: hundred dollars perton, but in a voluntary scenario, the market 603 00:30:06,200 --> 00:30:09,200 Speaker 4: value would pick at only thirty four billion dollars. So 604 00:30:09,320 --> 00:30:12,800 Speaker 4: prices would reach thirteen dollars perton twenty thirty, and then 605 00:30:12,840 --> 00:30:16,160 Speaker 4: fifteen dollars per ton twenty thirty eight, and only fourteen 606 00:30:16,240 --> 00:30:19,760 Speaker 4: dollars priton in twenty fifty. And that's nothing if you 607 00:30:19,840 --> 00:30:22,880 Speaker 4: compare it to let's say the EU carbon price, it 608 00:30:22,960 --> 00:30:25,480 Speaker 4: has reached around one hundred dollars per toon over the 609 00:30:25,520 --> 00:30:28,320 Speaker 4: past year, and even against the other scenarios. So such 610 00:30:28,360 --> 00:30:32,800 Speaker 4: low prices also do not give investors any reason to, 611 00:30:33,080 --> 00:30:35,480 Speaker 4: let's say, invest in the tech based removals that we 612 00:30:35,600 --> 00:30:39,760 Speaker 4: need to standardize or maybe raising integrity in this market. 613 00:30:40,160 --> 00:30:43,200 Speaker 1: Now, I know each type of carbon credit has its 614 00:30:43,240 --> 00:30:45,960 Speaker 1: own price in the voluntary market because of well the 615 00:30:46,040 --> 00:30:49,360 Speaker 1: costs it actually go into creating that offset but do 616 00:30:49,400 --> 00:30:52,400 Speaker 1: you think that there will be a long term gravitational 617 00:30:52,440 --> 00:30:55,360 Speaker 1: pull towards kind of one consistent price and that everyone 618 00:30:55,400 --> 00:30:57,800 Speaker 1: will try and work towards that, and if you aren't 619 00:30:57,800 --> 00:31:00,800 Speaker 1: cost competitive in that way, perhaps you'll get pushed out 620 00:31:00,840 --> 00:31:01,360 Speaker 1: of the market. 621 00:31:01,760 --> 00:31:05,200 Speaker 2: There will never be a single price for carbonof set. 622 00:31:05,240 --> 00:31:08,000 Speaker 2: We don't see that in any other commodity market of course, right, 623 00:31:08,160 --> 00:31:10,000 Speaker 2: so we'll never get there with carbon. But what you 624 00:31:10,040 --> 00:31:12,800 Speaker 2: will start to see is some homogenization in terms of 625 00:31:12,880 --> 00:31:14,920 Speaker 2: the products that are trading in this market and that 626 00:31:15,000 --> 00:31:17,680 Speaker 2: the prices that they fetch. And so, as you mentioned 627 00:31:17,760 --> 00:31:21,040 Speaker 2: data every single carbonof set project, I think there's maybe 628 00:31:21,160 --> 00:31:24,520 Speaker 2: nine thousand different major registered projects in the market today. 629 00:31:24,680 --> 00:31:27,680 Speaker 2: Every single project offers a different price. What we would 630 00:31:27,720 --> 00:31:30,000 Speaker 2: like to see is that price start to standardize into 631 00:31:30,240 --> 00:31:32,800 Speaker 2: maybe single digit amount of products out there. And so 632 00:31:32,840 --> 00:31:35,560 Speaker 2: I think that is the necessary direction of travel, and 633 00:31:35,560 --> 00:31:37,840 Speaker 2: there's a lot of exciting work on the horizon to 634 00:31:37,960 --> 00:31:40,680 Speaker 2: go ahead and standardize these prices. I'm going I'll let 635 00:31:40,760 --> 00:31:43,440 Speaker 2: Layla chime in on this, but we've written extensively about 636 00:31:43,480 --> 00:31:46,240 Speaker 2: the exchanges and the derivative products that now exist in 637 00:31:46,280 --> 00:31:48,720 Speaker 2: the carbonof set market. To get to this homogenization. 638 00:31:49,360 --> 00:31:52,480 Speaker 4: We do see that. So over the past couple of years, 639 00:31:52,720 --> 00:31:56,000 Speaker 4: you see that the voluntary carbon market is becoming more 640 00:31:56,040 --> 00:31:58,560 Speaker 4: and more of a commodity, and that you see it 641 00:31:58,800 --> 00:32:01,120 Speaker 4: very clearly when you look at that activity on exchanges. 642 00:32:01,240 --> 00:32:04,440 Speaker 4: So we saw exchanges coming up and saying, well, we 643 00:32:04,560 --> 00:32:08,400 Speaker 4: want to create something called standardized contracts. So you, as 644 00:32:08,400 --> 00:32:10,760 Speaker 4: a buyer, you would just opt for this bucket of 645 00:32:10,760 --> 00:32:14,440 Speaker 4: offsets that meets a certain criteria, but you don't really 646 00:32:14,520 --> 00:32:17,160 Speaker 4: have visibility on where those officets come from. You just 647 00:32:17,240 --> 00:32:19,160 Speaker 4: know that they're nature based. You just know that they 648 00:32:19,160 --> 00:32:21,800 Speaker 4: have core benefits, and you can trade them against other 649 00:32:22,080 --> 00:32:27,040 Speaker 4: standardized contracts. So this sort of bucketing of offsets and 650 00:32:27,240 --> 00:32:31,520 Speaker 4: trying to ask said the homogenize them within certain buckets 651 00:32:31,720 --> 00:32:34,640 Speaker 4: makes the market resemble more and more of a commodity. 652 00:32:34,720 --> 00:32:38,120 Speaker 4: And the volumes of those standardized contracts or the traded 653 00:32:38,200 --> 00:32:42,920 Speaker 4: volumes of those standardized contracts also increasing significantly, and that 654 00:32:43,240 --> 00:32:47,040 Speaker 4: mainly is because one you see traders seeing investment opportunity 655 00:32:47,160 --> 00:32:49,920 Speaker 4: in them. But also now buyers will need to have 656 00:32:50,080 --> 00:32:54,360 Speaker 4: access to humongous amounts of offsets instantaneously. They will no 657 00:32:54,480 --> 00:32:56,800 Speaker 4: longer have the time to look after each offset and 658 00:32:56,840 --> 00:32:59,000 Speaker 4: where it came from, but they'd rather rely on such 659 00:32:59,200 --> 00:33:00,720 Speaker 4: readily available products. 660 00:33:01,280 --> 00:33:03,760 Speaker 1: So here we are a quarter into twenty twenty four, 661 00:33:04,120 --> 00:33:07,520 Speaker 1: and while I know that we haven't done our outlook 662 00:33:07,560 --> 00:33:09,040 Speaker 1: on the year yet, I want to know if you 663 00:33:09,160 --> 00:33:11,480 Speaker 1: think that we are in the same situation as twenty 664 00:33:11,480 --> 00:33:14,160 Speaker 1: twenty three, or if there have been any signs that 665 00:33:14,520 --> 00:33:16,680 Speaker 1: the market is starting to correct itself. 666 00:33:17,240 --> 00:33:20,360 Speaker 4: It is correcting itself. In my view, I'm usually more 667 00:33:20,360 --> 00:33:23,400 Speaker 4: optimistic and sometimes I'm let down by the end of 668 00:33:23,400 --> 00:33:26,760 Speaker 4: the year. One cop turns around. But looking at January 669 00:33:26,880 --> 00:33:30,400 Speaker 4: and February so far, we saw one and uptaken the 670 00:33:30,480 --> 00:33:33,880 Speaker 4: demand levels, and we saw project developers being more aware 671 00:33:33,920 --> 00:33:37,400 Speaker 4: of what's to come. So previously we would just see 672 00:33:37,400 --> 00:33:40,840 Speaker 4: a pump of offsets populating the market, regardless of whether 673 00:33:40,840 --> 00:33:43,840 Speaker 4: they're good or bad. But now with standardization coming around 674 00:33:43,920 --> 00:33:47,160 Speaker 4: the corner, project developers are now taking a step back 675 00:33:47,400 --> 00:33:50,280 Speaker 4: and they're waiting for those standards. And this basically indicates 676 00:33:50,320 --> 00:33:53,640 Speaker 4: a heightened level of awareness in the market where we 677 00:33:53,880 --> 00:33:56,880 Speaker 4: are waiting for standards and want to apply them. So 678 00:33:57,400 --> 00:34:00,440 Speaker 4: uptake and demand supplies becoming more re in the bill, 679 00:34:00,520 --> 00:34:04,720 Speaker 4: and we're seeing some standardization, but also interestingly, policy and 680 00:34:04,800 --> 00:34:07,280 Speaker 4: other sectors also playing a role. So we have something 681 00:34:07,320 --> 00:34:11,040 Speaker 4: called CORSA, which is the scheme that is intended to 682 00:34:11,080 --> 00:34:14,960 Speaker 4: decarbonize the aviation sector. Part of it is using offsets 683 00:34:14,960 --> 00:34:18,040 Speaker 4: for that decarbonization, and they come with another slew of 684 00:34:18,200 --> 00:34:21,960 Speaker 4: regulation and standards and strict standards around offsets, and people 685 00:34:21,960 --> 00:34:24,239 Speaker 4: are looking towards them, and they're also being traded at 686 00:34:24,320 --> 00:34:27,480 Speaker 4: higher prices. So the short answer is, I'm more optimistic 687 00:34:27,680 --> 00:34:30,080 Speaker 4: around twenty twenty four relative to twenty twenty three. 688 00:34:30,400 --> 00:34:32,640 Speaker 1: With the caveat that you are just generally a more 689 00:34:32,680 --> 00:34:33,600 Speaker 1: optimistic person. 690 00:34:33,680 --> 00:34:36,280 Speaker 4: With the caveat of I'm generally a more optimistic person, 691 00:34:36,280 --> 00:34:37,960 Speaker 4: but we do have the numbers and data to pack 692 00:34:38,000 --> 00:34:38,680 Speaker 4: it up this time. 693 00:34:39,280 --> 00:34:41,200 Speaker 2: I would also just add we talked about a lot 694 00:34:41,200 --> 00:34:43,439 Speaker 2: of the criticism that we saw in twenty twenty three, 695 00:34:43,520 --> 00:34:46,080 Speaker 2: and I think it is worth mentioning, wen't We haven't 696 00:34:46,120 --> 00:34:49,160 Speaker 2: explicitly said this yet. All of that criticism was valid. 697 00:34:49,280 --> 00:34:52,799 Speaker 2: All of the projects that were scrutinized for creating low 698 00:34:52,880 --> 00:34:55,359 Speaker 2: quality credits, all of that scrutiny and all of those 699 00:34:55,400 --> 00:34:58,239 Speaker 2: accusations were true. Right, those projects should have never been 700 00:34:58,320 --> 00:35:00,640 Speaker 2: creating carbon credits in the first place. And to me, 701 00:35:00,880 --> 00:35:03,600 Speaker 2: thinking about this from an optimistic standpoint, what that's leading 702 00:35:03,600 --> 00:35:05,360 Speaker 2: to is a much more mature market. 703 00:35:05,440 --> 00:35:05,600 Speaker 4: Right. 704 00:35:06,040 --> 00:35:08,000 Speaker 2: We're trimming some of the fat, if you will, from 705 00:35:08,040 --> 00:35:10,000 Speaker 2: kind of the outskirts of this market, and you're leading 706 00:35:10,000 --> 00:35:13,120 Speaker 2: to more sustainable growth moving forward. And as Leila mentioned, 707 00:35:13,160 --> 00:35:15,239 Speaker 2: I think a lot of that scrutiny and a lot 708 00:35:15,239 --> 00:35:17,680 Speaker 2: of the fixing that was done in twenty twenty three 709 00:35:17,800 --> 00:35:21,000 Speaker 2: it's starting to materialize in more activity and more investor 710 00:35:21,040 --> 00:35:22,560 Speaker 2: optimism in twenty twenty four. 711 00:35:22,920 --> 00:35:25,880 Speaker 4: And on that investor optimism, now we're seeing more funds. 712 00:35:25,880 --> 00:35:28,520 Speaker 4: So like as Kyle mentioned before, you have people like 713 00:35:28,600 --> 00:35:34,040 Speaker 4: Microsoft targeting other projects and funding removals and high integrity projects, 714 00:35:34,239 --> 00:35:37,440 Speaker 4: and activity in that area has also increased a lot. 715 00:35:37,560 --> 00:35:40,520 Speaker 4: And it just shows you that now companies with big 716 00:35:40,560 --> 00:35:43,440 Speaker 4: wallets or companies that can afford it will go the 717 00:35:43,520 --> 00:35:46,920 Speaker 4: extra mile and offset in high integrity projects and that 718 00:35:47,000 --> 00:35:50,399 Speaker 4: will drive investment and scale the technologies that we need 719 00:35:50,640 --> 00:35:54,040 Speaker 4: for a more mature, more balanced market as well moving forward. 720 00:35:54,400 --> 00:35:57,120 Speaker 1: So Kyle, Laila, thank you very much for getting us 721 00:35:57,200 --> 00:35:59,200 Speaker 1: up to speed on what's happening in this space and 722 00:35:59,320 --> 00:36:03,000 Speaker 1: is the wild US actually turns into a much more 723 00:36:03,360 --> 00:36:08,120 Speaker 1: verified and solid market and something that more similarly resembles commodities. 724 00:36:08,440 --> 00:36:10,319 Speaker 2: Thanks so much, Dana really appreciate it. 725 00:36:10,320 --> 00:36:20,320 Speaker 3: Fun chat, Thank you, Dana. 726 00:36:20,480 --> 00:36:23,799 Speaker 1: Switched On is produced by Cambray with production assistance from 727 00:36:23,920 --> 00:36:27,720 Speaker 1: Kamala Shelling and Lushi Karunoraane. 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