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In touch with global carbon markets

Driving the low-carbon future

The last year has seen energy costs soar for industry and consumers as markets have been roiled by geopolitical events and supply/demand dislocations.

Wholesale natural gas and electricity prices rose by as much as ten times in the year to October 2021, according to an International Energy Agency report, due to a combination of low gas stocks and rapidly rising demand as the impact of the Covid-19 pandemic waned.

And the cost of carbon in many jurisdictions also increased. European emission allowance prices trebled in 2021, while prices in California, RGGI, New Zealand and the UK all reached record highs last year.

Some parties were quick to blame the cost of carbon as the main cause of higher energy bills and called for measures to dampen allowance prices, even though studies showed carbon allowances represented around one-fifth of the increased burden.

However, other observers pointed out that high energy prices represent a unique opportunity to double down on climate ambition – to speed up the transition to a low-carbon economy.

A high price of carbon, one that penalises carbon-intensive methods of production, also supports low-carbon alternatives. And higher carbon prices are a policy goal.

For example, the European Commission’s Hydrogen Strategy, published in July 2020, estimated that a carbon price of between €55-90 would be required to render “blue” hydrogen competitive as a feedstock.

Many countries also saw the recovery from the Covid-19 pandemic as a chance to rebuild their economies on more sustainable lines, emphasising climate-friendly development and leveraging the potential of Article 6 of the Paris Agreement as a way to “bake” low-carbon investment into their plans.

Rising fossil energy prices may not be here to stay, but the market is behaving as if they are. Share prices in renewable energy companies are rising rapidly as investors look for strong opportunities in alternative energy. Global investment in renewable generation was expected to rise 10% in 2021, after remaining flat in 2020, according to the IEA.

And much of this can be put down to the impact of carbon pricing. By forcing companies to internalise the cost of climate pollution, carbon markets are continuing to force the pace of change, even as the cost of fossil energy rises due to extraneous influences.

It’s a sign that we are on the right path.

Alessandro Vitelli
Communications Advisor

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IETA Member's Corner

How is Patch involved in the carbon market?

Patch is a marketplace that enables companies to seamlessly purchase as little as a gram to giga-tonnes of carbon removals from reputable and trusted carbon removal projects. By providing access to developers working on both nature-based and frontier technology, Patch enables businesses of all sizes to support carbon removal projects and neutralize emissions in an impactful way. 

In addition, Patch has an API that allows businesses to automate their climate goals with a few lines of code. Developers use the Patch API to build carbon removal into their products and services at the transaction level. Using this infrastructure, companies have launched carbon-neutral product delivery, net-zero flights, rides, crypto transactions, and more. Patch has built a network of 40+ frontier carbon removal and traditional projects including direct air capture (DAC), verified forestry, and kelp sequestration. By arming companies with the granularity required to embed carbon removal use cases into their own products and services, Patch is making climate action accessible to people and businesses worldwide. In addition, Patch enables companies to buy direct from verified carbon removal project developers so companies can feel confident that they are investing in the right resources. 

With more consumers and companies looking for ways to take impactful action against climate change, Patch makes this action accessible for small companies and big ones. As a result of working with Patch, companies build positive brand loyalty with their customers, attract new, climate conscious customers, and participate in the path to get to giga-tonne carbon removal.

Patch makes investing in and scaling climate action an easy and seamless process for businesses and consumers alike. From achieving corporate net zero goals to neutralizing the unavoidable emissions of everyday transactions, Patch is building the infrastructure for the sustainable economy. For more information, visit patch.io.

Why did you join IETA?

We are proud to join IETA, a trusted voice on market-based climate solutions, and look forward to working together with members in our quest to inspire and empower businesses to take climate action.

Lucy Hargreaves
Head of Public Affairs + Policy, Patch

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