Morgan Stanley Sees Tipping Point in CO2 Credits as Prices Sink
- Media Manager
- Sep 5, 2023
- 1 min read
Yahoo!Finance - Bloomberg
Written By: Lisa Pham
Published: September 6th, 2023
The market for carbon offsets is approaching a “material tipping point” following months of bad news that’s spooked investors, according to an analysis by Morgan Stanley.
The voluntary carbon market (VCM) has been gripped by a steady stream of scandals, leading to wild price swings and even collapsing valuations. That has implications for firms trading such credits, which have been saddled with vast piles of stranded assets, as well as for the companies using them to underpin green claims to customers and regulators.
“Price action in the voluntary carbon markets in 2023 reflects heightened concerns about project quality and a reluctance by buyers to risk their environmental reputation on a voluntary claim such as ‘carbon neutral’,” Morgan Stanley analysts including Carolyn Campbell and Stephen Byrd said in a client note published on Wednesday.
Futures prices have fallen between 38% and 77% so far this year “amidst significant negative press of the market,” the analysts wrote. Spot market prices have fared better, on average, they said, but there’s been “a broader market softening across most major project types.” The upshot, they said, is that the market now faces “a reckoning,” but there’s reason to believe that “progress” is coming.
