Carbon markets
Overview
Carbon markets are developing as a crucial economic lever in the challenge of reversing the accumulation of greenhouse gases in the Earth’s atmosphere, while CO2 remains a key factor in a range of industrial sectors.
National governments are embracing carbon markets, with a proliferation of carbon pricing policies worldwide. The private sector is channelling finance into projects that generate carbon emissions reductions and removals to mitigate their hard-to-abate emissions.
And the United Nations is making progress in building a global marketplace for carbon emissions reductions that will facilitate nations’ attempts to meet their obligations under the Paris Agreement.
Industrial sectors remain a key source of CO2 emissions and consumption, with innovation looking towards sustainable methods of production and utilisation.
Argus is setting the stage for an extended period of growth, evolution and interconnection of carbon market participants and initiatives.
Latest carbon markets news
Browse the latest market moving news on carbon markets.
EU could use Pacm credits as 'safety reserve': Study
EU could use Pacm credits as 'safety reserve': Study
Berlin, 5 May (Argus) — The EU should consider treating some of the international carbon credits that it can use to meet up to 5pc of its 2040 climate target as a "safety reserve" to offset potentially damaging developments in its land-use sector, according to a paper published by environmental research institute Oeko-Institut this week. Using international credits as a safety reserve would mean raising the EU's domestic reduction target beyond 85pc, the Oeko-Institut researchers emphasised in their recommendations to the EU. The bloc has set a target to reduce its emissions by 90pc compared with 1990 levels by 2040. The EU should also not allow the direct use of carbon credits by companies covered by the bloc's emissions trading system (ETS), they said, with credit procurement preferably carried out by a central purchasing facility. The UN-controlled Paris Agreement Crediting Mechanism (Pacm) under article 6.4 of the Paris Agreement should be used as a "minimum" integrity benchmark for purchased credits, combined with additional criteria and safeguards, the researchers said. And the EU should clarify the maximum amount of carbon credits that can be used, bearing in mind that "high-quality carbon credits will not be available at low cost", while the bloc should also engage in strategic partnerships with project host countries at an "early stage", the study said. The researchers recommended that the EU count only around 50pc of the credits' emissions savings towards its own nationally determined contribution (NDC), or climate plan, under the Paris Agreement. At least 30pc should be kept for the project host countries, while 10pc should be put into the UN's climate adaptation fund — compared with the 5pc obligation under article 6.4 — and 10pc cancelled to contribute to global emissions reductions, compared with the 2pc mandatory cancellation under article 6.4. There could be variations between host countries, with least-developed countries receiving a higher share of credits, or between types of emissions-cutting activities, the researchers said. The EU should ensure that third-party auditors are not selected or paid by project developers, they said. The researchers also warned about the "accounting gaps" in the Paris Agreement arising from single-year NDC targets compared with carbon-market approaches commonly implemented over multi-year periods. Countries with single-year targets could resort to "averaging" the number of carbon credits used or sold over an NDC period for the target year, potentially leading to double counting of emissions reductions and an increase in global emissions, even when carbon credits represent additional emission reductions or removals. The EU should only engage with countries that also use multi-year approaches, the Oeko-Institut recommended. And the bloc should implement a "like-for-like" approach for any use of carbon credits subject to reversal risks, which could be used to compensate for carbon emissions or a decline in removals from the land-use sector. The EU should also not count payments for the credits as climate finance under the UN's new collective quantified goal target of providing "at least" $300bn/yr in climate finance for developing countries by 2035, the researchers said. If the EU uses ambitious values for sharing emissions cut benefits, this could lead to project developers becoming unwilling to sell carbon credits with less ambitious benefit-sharing arrangements, the researchers warned. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Methane emission cuts could boost energy security: IEA
Methane emission cuts could boost energy security: IEA
London, 5 May (Argus) — Cutting methane leaks and routine flaring could unlock significant volumes of gas to alleviate pressure on a tight global LNG balance, according to the International Energy Agency's (IEA) methane tracker published on Monday. The effective closure of the strait of Hormuz since 28 February has shut in around a fifth of the world's LNG supply, with the IEA estimating 110bn m³ of gas passing through the waterway in 2025. But the agency suggests that roughly double the amount of gas trapped in the Mideast Gulf could be replaced by cutting methane emissions, which has the potential to relieve pressure on the tight global LNG market. The organisation indicates that large volumes of gas output are being wasted because of methane leaks, flaring and venting from oil and gas operations. And it estimates that around 100bn m³ of gas could be made available through a global effort to cut methane emissions from oil and gas operations, as well as an additional 100bn m³ through the elimination of non-emergency flaring. Deployment of infrastructure to achieve such large cuts would take time, but the IEA said that immediate measures across global upstream and downstream operations could relieve gas markets by nearly 15bn m³ in the short term. The report identifies the primary exporting countries with scope to create additional gas supply as Turkmenistan, Algeria and Nigeria, while Asia is the main importing region where gas losses could be prevented ( see graphs ). The agency also projects that around 30pc of all methane emissions tied to fossil fuels — more than 35mn t/yr — could be removed at no net cost, based on average energy prices in 2025. Required capital for abatement is lower than the market value of the gas captured to be sold or used, the IEA said. And the gap could grow as a result of the rise in prices cause by the war in the Middle East, according to the organisation. No sign of progress The IEA found that methane emissions tied to fossil fuels edged up on the year in 2025, indicating no progress towards targets. Output from the fossil fuel sector — including oil, natural gas, coal and bioenergy — reach record highs in 2025 and methane emissions from these activities totalled 124mn t. This is up from roughly 120mn t in 2024 . Oil production emitted the highest volume of methane at around 45mn t, coal closely following with 43mn t while emissions from gas output were 36mn t. And around 70pc of fossil-fuel methane emissions came from only 10 countries, with China, the US and Russia the leading emitters ( see graph ). Existing policies and regulations for global abatement will only cut energy-sector methane emissions by 20pc by 2030 and 26pc by 2035. This is short of the global methane pledge reduction target of a 30pc cut by 2030. By Iris Petrillo Potential additional gas supply from abatement of methane emissions in importing countries bn m³ Potential additional gas supply from abatement of methane emissions in exporting countries bn m³ Fossil-fuel methane emissions by country kt Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Japan stockpiles biomass to avoid higher upstream costs
Japan stockpiles biomass to avoid higher upstream costs
Singapore, 5 May (Argus) — Several biomass power producers in Japan have been trying to secure more biomass fuels than usual through bilateral negotiations, because of an uncertain market outlook caused by the war in Middle East, to avoid any prolonged impact of rising upstream costs. A Japanese independent power producer (IPP) recently purchased several cargoes of Indonesian palm kernel shells (PKS), amounting to over 200,000t. The prices were in a wide range of $93-102/t fob east coast Sumatra, to be loaded in early May to late December. The reason for such a sizeable volume of procurement is to mitigate the risk of unstable market environment, the company said. The IPP has also secured considerable volumes of wood pellets for the same reason from Malaysia, Indonesia and China, to meet its spot demand for this year. The company has been struggling with the quality of Vietnamese wood pellets. The company purchased fewer spot cargoes of wood pellets than PKS, because most of its wood pellet supplies to biomass-fired power plants in Japan is fulfilled through term contracts. Another power producer sought to procure 80,000-100,000t of wood pellets to meet its spot demand for the whole of this year, with the aim to avoid the market uncertainty caused by the conflict, a market source said. Some consumers are also likely to do the same, mainly in PKS markets, while other companies are following their initial procurement schedule, according to traders. Argus assessed the Indonesian market for PKS that meets Japan's feed in tariff (FiT) requirements at $100.06/t fob east coast Sumatra on 29 April, while the price for Malaysian PKS that complies with Japan's FiT requirements were assessed at $93.71/t fob peninsular Malaysia. The Vietnamese market for pellets that meet Japan's FiT requirements was assessed at $151.40/t fob Vietnam on 29 April. Bulk freight rates from Vietnam to Japan were in a very wide range of $25-45/t, while fuel costs were still volatile because of the war in the Middle East. Rising operating costs Biomass buyers fear that rising upstream costs may persist because of the inflationary impact that the US-Iran war has had on gasoil, bunker fuel and freight costs. Crude palm oil (CPO) prices in Indonesia have also risen due to the war and a weak harvest season. PKS is a by-product of CPO mills and its availability depends on the harvest of palm fresh fruit bunches and the production of CPO. PKS export taxes are based on CPO prices, which have exceeded over $1,000/t in May. This has led to a $10/t export tax for this month . PKS exporters will also need to pay a levy of $5/t, bringing the total cost of tax and levy to $15/t in May, the highest level in almost four years. It was last higher at $16/t in July 2022. Tax and levy rates averaged around $10.60/t in 2025. The nearly $5/t increase means shipments would cost around $44,000-88,000 more on an fob basis for 10,000-20,000t PKS cargoes to Japan. Rising fuel prices in Indonesia and Malaysia, which are major PKS exporting countries, have weighed on operating costs of suppliers, because they must collect PKS from CPO mills by truck. Heavy machinery, barges, and screeners, which are used in the PKS industry, are also exposed to higher fuel prices, and total operating costs are currently higher by 25-35pc than before, market participants said. Meanwhile, some of sellers were willing to compromise on PKS prices to align with buyer expectations to clear stockpiles. Japanese trading firms face rising freight rates stemming from the US-Iran war and are asking sellers to reduce fob prices to help offset that effect, according to market sources. In the Vietnamese wood pellet market , recent offer prices from suppliers for Japanese biomass-fired power plants have been likely $160/t or higher on fob basis. But bidding prices by Japanese buyers seem the same as before the war, around $140-150/t on fob basis, resulting in limited spot liquidity. This has prompted some buyers to source cargoes in other countries. By Takeshi Maeda and Nadhir Mokhtar Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Australia extends EV tax cuts to 2029 on higher sales
Australia extends EV tax cuts to 2029 on higher sales
Sydney, 5 May (Argus) — Australia's federal government will continue its fringe benefits tax (FBT) exemption for electric vehicles for another 12 months before winding back the discount in stages to 2029, on the back of a surge in demand. The full discount for battery EVs costing less than A$91,000 ($65,000) will continue until 31 March 2027, energy minister Chris Bowen said on 5 May, before the FBT is changed to cover only EVs costing less than A$75,000 from 1 April next year, while more expensive EVs will get a 25pc discount on FBT payable. All EVs below the luxury car tax threshold will receive a 25pc discount on FBT from 1 April 2029. The new policy comes after a government review of EV discounts, which found that 330,000 EVs were sold over the rebate's initial three years to December 2025, with about 133,000 bought under leases benefitting from the FBT exemption. Plug-in hybrids, EVs also featuring a combustion engine but with an externally chargeable battery, were included in the exemption until 1 April 2025. Around 64,000 extra battery EVs and 78,000 extra EVs including plug-ins were sold due to the discount in the first three years, according to the review. The nation's Productivity Commission (PC) had advocated a phasing out of the FBT, a policy platform criticised by industry body the EV Council as stalling Australia's energy transition. The PC estimated that the electric car discount's (ECD) cost of CO2-equivalent (CO2e) emissions abatement was somewhere between A$987-20,084/t, unfavourable compared to other policies, but improved air quality, lower operational costs for motorists and reducing reliance on imported fuel were considered benefits, the review said. Battery boom Australia used 273,000 b/d of gasoline last year , mainly for passenger cars, while a proportion of the 578,000 b/d in average gasoil consumption went to light commercial and passenger vehicles. But EV uptake is rising. Soaring fuel costs and panic-buying which led to tighter availability of transport fuel in some areas may be boosting EV uptake. EVs accounted for 14.6pc and 16.4pc of all new sales in March-April, up from 7.5pc and 5.9pc a year earlier, according to Federal Chamber of Automotive Industries data. This spike may also be due to concerns about the FBT phase-out ahead of the 12 May 2026 budget and some impact from Canberra's fuel efficiency standard , which mandates carmakers to meet tightening emissions standards across their range. A commuter-centric nation, Australians mostly live in suburban areas characterised by distance from employment and poor public transport connections. Demand for EVs is still well-below combustion engines, renewables lobby Rewiring Australia said on 5 May, and more charging infrastructure and affordable supply are needed to make EVs the first choice. Transport-related emissions were 98.7mn t CO2e in the year ending 30 June 2025, or 22.5pc of Australia's total, up by 0.3pc on the year . By Tom Major Australia's gasoline sales by state (b/d) Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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