The Stockdale-White Carbon Curve

Winter 2023

 Executive Summary 

In the age of a warming climate, record-breaking temperatures are increasingly threatening people and wildlife across the globe. Ecosystem restoration, with its dual capacity to sequester carbon and enhance biodiversity, has the potential to be a huge part of the solution. However, its ability to do so up to now has been limited by considerable financial constraints. Turning the tide of environmental decline will require a significant upscaling of private investment into nature recovery, and the natural capital economy offers the potential to make this happen. 

Carbon markets are key to driving the natural capital economy forwards incentivising both climate change mitigation and ecosystem restoration. By providing investors with the confidence that they’ll see a return, forward pricing curves can be used to encourage up-front capital investment into restoration projects. However, the lack of future prices for carbon credits currently makes this difficult. 

At Oxygen Conservation, we have been developing a forward pricing curve for the UK carbon market over the last twelve months. This tool will be pivotal in unlocking investment and kick-starting the UK natural capital economy, supporting our efforts to mobilise £1 billion to restore nature. 

We aim to achieve this with carbon credits at the core of our model. Falling within the mitigation hierarchy, carbon credits will be crucial in the race to Net Zero, although they bring risks of greenwashing, market manipulation, and price volatility, alongside weak regulation and verification resulting in limited effectiveness and low market integrity. By working in line with the recently published Nature Market Principles, we will demonstrate that high-quality, high-integrity schemes can be a reality, delivering science-based nature recovery via transparent, verifiable, and genuinely impactful credits. 

In this report, we outline our estimate of how carbon prices could evolve using our Stockdale-White curve. In doing so, we outline four chapters, taking us from today through to 2050 and beyond, accounting for carbon price fluctuations along the way. We anticipate a continuing rise in global emissions coupled with increased prices of high-quality carbon credits before their widespread demand and uptake leads the way towards climate positivity nearing the end of the century. 

What if we’re wrong? If the Stockdale-White forward pricing curve proves to be inaccurate and carbon pricing doesn’t develop as we expect, there is a very real risk we will have helped drive significant amounts of money to the natural capital economy, delivering positive environmental and social impact in the process. And for this we can only apologise and say you’re welcome!