Goldman Sachs: Carbon Offset Markets Are About To Take Off

Oilprice.com08-07

Last year, the Intergovernmental Panel on Climate Change (IPCC) published a report that global financial flows into climate solutions are currently 3-6x lower than the levels required for the world to...

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According to the IPCC, the planet needs to cut annual greenhouse gas emissions by 29-32 gigatonnes, or 45%, of equivalent carbon dioxide  by 2030 if it’s to keep average global temperature rise less than 1.5°C above pre-industrial levels. Luckily, climate experts are now predicting that one segment of the decarbonization market is about to explode. Goldman Sachs has predicted that the EU carbon market–the largest in the world–is about to decouple from gas prices in a way that carbon credit prices will increase sharply at a time when the continent’s gas supply surges.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0878866978.SGD":"First Eagle Amundi International AHS-QD SGD-H","LU0300736062.USD":"FRANKLIN NATURAL RESOURCES \"A\" (USD) ACC","LU0795875169.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD-H","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU1978683503.SGD":"Blackrock Sustainable Energy A2 SGD-H","OXY":"西方石油","LU0433182093.SGD":"First Eagle Amundi International AS-C SGD","LU0347712357.USD":"BNP PARIBAS GLOBAL ENVIRONMENT \"C\" (USD) ACC","LU1721427968.SGD":"BNP PARIBAS AQUA \"CRH\" (SGDHDG) INC","BK4021":"海运","LU0827878280.USD":"贝莱德欧洲市场基金D2","LU0068578508.USD":"First Eagle Amundi International Cl AU-C USD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","DAC":"达那俄斯","LU1791807156.HKD":"BGF WORLD FINANCIALS \"A2\" (HKDHDG) ACC","LU2237443382.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA USD","LU0278409577.USD":"MANULIFE GLOBAL FUND-GLOBAL RESOURCES FUND \"AA\" (USD) INC","LU2237443549.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","GS":"高盛","DEN":"丹博里原油","BK4570":"地缘局势概念股","LU2237443622.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc USD","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU0061474960.USD":"天利环球焦点基金AU Acc","LU0788109394.HKD":"BGF WORLD ENERGY \"A2\" (HKDHGD) ACC","LU2237443978.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc SGD-H","LU1196525536.USD":"BGF CONTINENTAL EUROPEAN FLEXIBLE \"A2\" (USDHDG) ACC","IE00BFXG1179.USD":"BNY MELLON U.S. EQUITY INCOME \"B\" (USD) INC","BK4585":"ETF&股票定投概念","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","BK4101":"工业气体","XOM":"埃克森美孚","LU1620156213.USD":"BNP PARIBAS AQUA \"C\" (USD) INC","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","SG9999014559.SGD":"United Income Focus Trust Dis SGD","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU1066051498.USD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM2\" (USD) INC","SG9999014567.USD":"UOB UNITED INCOME FOCUS TRUST FUND (USD) ACC","LU0683600562.USD":"AB SELECT US EQUITY \"A\" (USD) ACC","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","LU0506197887.SGD":"Janus Henderson Horizon Pan European Absolute Return A2 SGD-H","LIN":"Linde PLC","BK4588":"碎股","GTPA":"Gores Technology Partners Inc","LU0787776722.HKD":"AB SELECT US EQUITY PORTFOLIO \"A\" (HKD) ACC","LU1064927863.SGD":"JPMorgan Funds - Europe Dynamic A (acc) SGD-H","LU0985489474.SGD":"First Eagle Amundi International AHS-C SGD-H","LU0769137737.USD":"BGF CONTINENTAL EUROPEAN FLEXIBLE \"A2\" (USD) ACC"},"translate_title":"高盛：碳抵消市场即将起飞","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DAC":1,"DEN":1,"GS":1,"GTPA":1,"LIN":1,"XOM":0.9,"OXY":0.9},"content_text":"Last year, the Intergovernmental Panel on Climate Change (IPCC) published a report that global financial flows into climate solutions are currently 3-6x lower than the levels required for the world to meet its climate goals by 2030. According to the IPCC, the planet needs to cut annual greenhouse gas emissions by 29-32 gigatonnes, or 45%, of equivalent carbon dioxide (CO2e) by 2030 if it’s to keep average global temperature rise less than 1.5°C above pre-industrial levels. Luckily, climate experts are now predicting that one segment of the decarbonization market is about to explode. Goldman Sachs has predicted that the EU carbon market–the largest in the world–is about to decouple from gas prices in a way that carbon credit prices will increase sharply at a time when the continent’s gas supply surges. \nAccording to Goldman’s Michele Della Vigna, Europe’s LNG supply is set to increase by 50% over the next five years as many projects that kicked off after Russia invaded Ukraine come online. However, this development will come at a time when the EU’s carbon market tightens significantly in the coming decades as the bloc works toward its goal of net-zero emissions. This will allow gas prices to remain stable at a time when the price of carbon offsets takes off. According to Della Vigna, concerns over inflation have made the EU less inclined to allow the carbon price, “to go much higher than where it is at the moment in a high energy price environment. That’s why cheaper gas actually should mean higher carbon prices. Not just because of affordability, but also because cheaper gas means European heavy industry can come back and as they come back more emissions come back, which leads to a tighter carbon market from 2026.” Indeed, analysts at BloombergNEF have forecast EU carbon increasing to nearly €150 a ton by 2030, more than double the current price of €66 per ton.\nEurope’s carbon markets will welcome Goldman’s bullish predictions. The EU is the world’s largest carbon market, both in terms of traded volume and value. However, its dominance has been slipping, with the bloc claiming 75% of global carbon market futures and auctioned volumes, or around 8 billion allowances, in 2023, down from 90% in 2017. Last year, Citi warned that UK’s carbon permit prices could fall by almost 50% thanks to the UK government’s “lack of political ambition” to reform the country’s emissions trading system. \nCarbon markets are trading systems in which carbon credits are sold and bought. Companies or individuals can use carbon offsets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions. For example, a large U.S. airline like Southwest can pay for a patch of rainforest to be protected in the Amazon as a way to cancel out some or all of its emissions. A total of 178 million carbon credits were retired in 2023, roughly equivalent to the combined annual emissions of the Netherlands and Luxembourg. \nCarbon Capture Becomes Profitable\nYet another decarbonization market is likely to reap the benefits of Europe’s carbon credit price boom: Carbon Capture, Utilization & Storage (CCUS). According to Della Vigna, the sharp increase in the price of carbon would also make large-scale carbon capture and storage profitable.\nIn a report titled  “CCUS: 10-year market forecast”, Wood Mackenzie has predicted that global CCUS capacity will hit 440 millions of tonnes per annum (Mtpa) while storage capacity will reach 664 Mtpa over the next decade. According to WoodMac, CCUS is receiving strong support by governments in the U.S. and Europe while APAC (Asia–Pacific) lags behind. Still, that’s just a fraction of the 4.2 gigatons of CO2 (GTPA) required to be captured every year to achieve net-zero commitments by 2050, leaving plenty of room for growth.\nBig Oil companies also stand to benefit from the carbon boom thanks to growing utilization of CCUS in enhanced oil recovery (EOR). Last year, E&P giant Exxon Mobil (NYSE:XOM) acquired the developer of CCS solutions, Denbury Inc. (NYSE:DEN) in an all-stock transaction valued at $4.9B.  Denbury recycles CO2 through its EOR operations, and uses it to produce environmentally-friendly, carbon-negative Blue Oil. Now one of Exxon’s subsidiaries, Denbury owns the largest CO2 pipeline network in the U.S. at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas and Mississippi, as well as 10 onshore sequestration sites. In yet another major CCUS deal, last year, Exxon Mobil signed a long-term contract with industrial gas company Linde Plc. (NYSE:LIN) that involves offtake of carbon dioxide associated with Linde’s planned clean hydrogen project in Beaumont, Texas.  Exxon will transport and permanently store as much as 2.2M metric tons/year of carbon dioxide each year from Linde’s plant. Last year, E&P giant Exxon Mobil (NYSE:XOM) acquired the developer of CCS solutions, Denbury Inc. (NYSE:DEN) in an all-stock transaction valued at $4.9B. Denbury recycles CO2 through its EOR operations, and uses it to produce environmentally-friendly, carbon-negative Blue Oil. Now one of Exxon’s subsidiaries, Denbury owns the largest CO2 pipeline network in the U.S. at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas and Mississippi, as well as 10 onshore sequestration sites. Last year, Exxon Mobil signed a long-term contract with industrial gas company Linde Plc. (NYSE:LIN) that involves offtake of carbon dioxide associated with Linde’s planned clean hydrogen project in Beaumont, Texas.  Exxon will transport and permanently store as much as 2.2M metric tons/year of carbon dioxide each year from Linde’s plant. \nMeanwhile, Occidental Petroleum Corp. (NYSE:OXY) has created Oxy Low Carbon Ventures (OLCV). Through a development license with Carbon Engineering, Oxy’s 1PointFive is advancing large-scale Direct Air Capture (DAC). Its first facility, STRATOS, is under construction in the Permian basin. STRATOS is designed to extract 500,000 metric tons of atmospheric CO2 annually--laying the foundation for commercial-scale DAC deployment.\nBy Alex Kimani for Oilprice.com\nMore Top Reads From Oilprice.com\n\nU.S. Gasoline Prices Continue to Drop\nGoldman Sachs Sees a $75 Floor for Brent Oil Prices\n The Start of De-Dollarization: China’s Move Away From the USD \n\nRead this article on OilPrice.com","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"Policy And Regulatory","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2457488454"}