Helping clients on the path to net zero

Gareth Turner, co-founder and director of Numerco, explains how it has been helping clients to navigate the challenges in the voluntary carbon market over the past year and where it is finding future opportunities.

Environmental Finance (EF): What is Numerco and how does it support clients in the voluntary carbon markets

Gareth Turner (GT): Numerco is an independent energy merchant specialising in the sourcing and supply chain optimisation of low carbon fuel, renewable energy, and industrial products with a low emissions focus. With the aim to transition to a decarbonised economy, we work on a multitude of environmental solutions. Together with our network of partners and clients, we finance, develop and trade emission reduction projects across many of the carbon taxes and emissions trading schemes worldwide.

EF: What have been the main market trends/developments over the past year?

GT: It's been a challenging year for the voluntary carbon market (VCM) as it matures into a fundamental tool to combat climate change and for companies to achieve their net zero commitments. Uncertainty around policy direction and a drive for greater transparency have presented significant hurdles but the market is robust, adaptable, and up for the challenge ahead. Several independent integrity initiatives have presented protocols to provide guidance of best practice while accredited standards have tightened methodologies and provided labelling to give confidence around carbon claims. Over 75 ETS (emission trading schemes) and carbon taxes are now in place worldwide and the diversification of new standards, looming Article 6 legislation and an emerging removal space in step with an integrity drive – these developments are creating complexity for customers and market participants. This is leading to calls for regulation and consolidation. Numerco has been working hard to educate and provide customers with the tools to make informed decisions on their path to net zero.

EF: How has demand shifted at all over the last year – has it come back to the market following criticism, how have things like the SBTi's review helped and broadly where is demand coming from at this stage?

GT: Buyers have become more selective, with increased focus on high-quality credits that demonstrate additionality, permanence, verifiable reductions, and co-benefits. Scrutiny and reputational concerns mean that companies are seeking credits that withstand external review. What constitutes high-quality credits is still up for discussion. Earlier in the year, a narrow band of REDD projects drove much of the demand only for many of those projects to lose their ratings spectacularly following exposes. Controversy with over-crediting from impact projects, U-turns in stances from protocols regarding usage of offsets and blanket decisions by self-appointed bodies to ban entire sections of methodologies have created damage and market confusion. A drive towards removal units is slowly building with cost differentials meaning that avoidance credits continue to be a foundation of portfolios. Projects need to be assessed on their merits with proper due diligence and transparency, with access to site visits and relationships rather than commoditisation.

EF: What developments/changes do you think are needed over the next year to support the growth of the VCM and your work?

GT: The market needs consolidation and a common direction without killing the VCM's community reach and ingenuity. Divergent views are creating confusion while most participants welcome the increased scrutiny and transparency to engineer an effective, functioning market. Improvements around real-time data, MRV (Measurement, Reporting and Verification) and green taxonomy for the VCM would help buyers make more informed decisions and avoid concerns over greenwashing. A centralised framework that provides clarity on rules and claims is essential.

EF: Are there any new trends or developments you expect to play a major role in the next year e.g. new technologies, new standards, policy developments etc.

GT: Policy is the key to providing a longer-term view. Clarity over Article 6 will unlock investment and provide a runway for the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) scheme to build on its momentum. However there needs to be flexibility to allow for the use of a multitude of paths to achieve decarbonisation rather than arguing over the minutiae.