Environmental Commodities Markets

National REC Prices Fell to Lowest Point in Over a Year, While Carbon Markets Remain Stable

National REC prices fall to the lowest point seen since early 2021

National Green-e REC prices fell to around $2/REC for the 2022 vintage, making this the lowest pricing seen since Q1 2021. This steep price drop has generally been attributed to a significant supply of RECs on the market coupled with a typical lower demand for voluntary RECs in the summer season.

Figure 6. National REC Prices, Q2 2022 PJM RECs prices remained high in Q2

Compliance RECs in PJM have remained at historically high levels, with REC prices peaking over $25/REC for PJM Tier 1 RECs during Q2. At the time of this report’s publication, REC prices have cooled slightly to approximately $23-24/REC. Alternatively, for those looking to buy PJM RECs, the price of Ohio-eligible RECs has fallen significantly to around $6/REC. This is due to a change in regulation that allows RECs from non-PJM sited projects that connect into Ohio to qualify for this REC type, greatly increasing supply and thus lowering the price.

Figure 7. PJM Tier 1 REC Prices, Q2 2022

Carbon offset pricing rose to $10+/tonne from a March low

Since a significant market price drop in March, the carbon offset market has slowly recovered, with traded nature-based solutions once again passing $10/tonne. However, traded pricing is still far below the peak it saw at the beginning of this year.

Despite the generally lower pricing of the standard product, high-demand projects - including tropical forests and nature-based removals - have continued to increase in price, as the rising level of demand for that category of projects exceeds supply. Pricing varies significantly based on each project and vintage year, with current pricing on nature-based reductions with strong United Nations Sustainable Development Goal alignment in the $14-18/tonne range, and nature-based removals mainly being sold in the low $20/tonne range. Officially tagged carbon removal credits are now available

The American Carbon Registry (ACR) began officially tagging eligible project credits as removals in Q2. Previously, the distinction between a removal and a reduction credit was not officially recognized. With the official tag now in place, developers and vendors are able to price those removal credits at a higher price than they had previously, as there is significant demand in this category. Many buyers seek removal credits, as they can be used in accordance with a Science-Based Target Initiative (SBTI) net-zero goal.