According to a new report from Ecosystem Marketplace, carbon markets are on track to reach $1B before the end of the year.
This is a 60% increase from last year, driven by companies focused on achieving net-zero emissions.
To meet the Paris Agreement’s 1.5° target, the world will have to cut pollution levels in half by 2030. The goal is to reach net-zero emissions by 2050.
Stephen Donofrio, the report’s lead author, said, “We’re seeing record market volume and value in 2021. The markets are on track to hit $1 billion in transactions this year if current activity levels and growth continue. It’s not just companies buying carbon credits as a small piece of their net-zero corporate strategy.
There’s an increase in speculators purchasing credits. The combined value of those deals is becoming a serious source of finance for green projects around the world.”
To help ensure carbon credit quality and standardization, the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), led by Mark Carney, UN special envoy for climate action and former Governor of the Bank of England, is forming an independent Governance Body.
Annette Nazareth, the Taskforce’s Operation Lead and former SEC commissioner, said, “The new Governance Body being established by TSVCM will play a key role in ensuring the large volume of carbon credits traded are of high quality and integrity.”
Since the supply of environmental projects is tightening, credit prices have gone up. Patrick Maguire, one of the report’s lead authors and Senior Manager of Ecosystem Marketplace, says that “Whether the higher prices will entice new supply to enter the market quickly enough to meet rising demand is still an open question. Most carbon projects typically take years to develop.”
Regardless, the higher prices are great news for project developers, many in Asia, Latin America, and Africa. These projects are sparking development in regions that need it most.
Michael Jenkins, CEO of the nonprofit group Forest Trends, a parent organization of Ecosystem Marketplace, says that the challenge for the voluntary carbon markets is no longer about finding credit buyers. “Now, we all need to guide the markets to deliver the highest quality possible, with the greatest benefit possible for the planet and communities.”
Some studies have indicated that by 2050, the global carbon market could top $22 trillion. With benefits spanning the environment and socio-economic development, is it any surprise? The carbon market has the potential to combat climate change and support sustainability around the world.
