Offset Pricing: How much do offsets cost?

It is nearly impossible to give a precise overview of current offset market prices, as the market is considerably fragmented due to the variety of available standards, project types and locations, delivery guarantees, contract terms and conditions, the range in quality of offsets, etc. That said, the main price drivers are an offset’s standard and origin (i.e. project type). In a competitive market, offset prices are a function of supply and demand. The attractiveness of a project depends on the buyer’s objectives. These are different for a compliance buyer than for a voluntary buyer: Compliance buyers are interested in obtaining credits reliably and cheaply in order to fulfill their regulatory requirements.

Most institutions that voluntarily use offsets for their climate neutralization efforts want to communicate that effort to the public and choose projects that are well-received by the target group.

In Europe, voluntary buyers are especially interested in biomass, renewable energy and end-user energy efficiency projects from less developed countries. Other emission reduction projects such as industrial gas projects at chemical plants are less attractive to these buyers because, despite their emission-reducing capability, such projects deliver very limited co-benefits such as job creation and protection of local ecosystems.

In the US, voluntary buyers prefer offsets generated by domestic projects, and are less focused on project type or sustainable development components.

There is a large price difference depending on the quantity of offsets a company or individual is looking to buy. Wholesale offset prices range between $2-$10 per tonne (e.g. buying 10,000 tonnes or more) whereas retail prices for offsets range between $10-$40 per tonne (e.g. for buyer who are looking to buy just up to a few hundred tonnes).