According to Abatable’s VCM Investment Attractiveness Index, Colombia, Kenya, Cambodia, Mexico, and Peru are the top five countries for carbon credit investors in 2024. The Index, released during Climate Week NYC, ranks countries based on their attractiveness for voluntary carbon market (VCM) investments.
The ranking considers factors such as regulatory advances, market readiness, project opportunities, and ability to shape future carbon markets.
Abatable is a top provider of carbon market solutions, offering tools to help businesses navigate carbon markets, find the right partners, assess market risks, and boost environmental impact.
Abatable co-founder Maria Eugenia Filmanovic explained that their approach also considers a country’s potential for impact on climate, nature, and people. Valerio Magliulo, Abatable’s CEO and co-founder emphasized that as the carbon market landscape evolves, access to reliable data is essential for making informed investment decisions. He further noted that:
“The VCM Investment Attractiveness Index is a critical tool that helps democratize carbon market data for the benefit of participants across the market, enabling them to make informed decisions and navigate the VCM, ultimately helping to scale the market as a whole.”
Regulatory Progress in Carbon Market Drives Rankings
The top-ranked countries owe their success largely to their regulatory progress. For example, Colombia’s carbon tax has significantly boosted market activity. Its new regulatory framework and national carbon registry attract significant interest from carbon investors.
Colombia, one of the world’s 17 megadiverse nations, is home to a significant portion of Earth’s species, largely due to its share of the Amazon rainforest. This rich biodiversity has helped the country become a global leader in nature-based solution (NBS) carbon credits, with 142 million tonnes issued since the market’s start.
The South American nation has also excelled in the global carbon market, using a mix of compliance mechanisms and VCMs to showcase an innovative approach to carbon pricing.
Similarly, Kenya’s 2024 carbon market regulation created a more favorable environment for carbon project development and investment. The country has recently approved carbon market policies that create an investor-friendly environment and facilitate Article 6 compliance with the Paris Agreement, ensuring stable growth in the carbon credit supply.
Their regulatory foundation positions Colombia and Kenya as key players in the global carbon market.
Key Insights From 2024 VCM Investment Index
Abatable VCM Investment Index uses 3 pillars and 24 indicators to assess the carbon market landscape, specifically analyzing the following aspects:
- investment potential,
- national readiness for carbon trading, and
- opportunities for improving environmental and social conditions.
Notable movements in the rankings include Colombia leaping 13 places to first and Cambodia jumping to third.
The Index also reflects the volatility and complexity of the carbon credit market, with some countries advancing due to groundwork for Article 6 of the Paris Agreement, which allows carbon trading between nations.
Countries like Madagascar, Zambia, and Brazil have also gained prominence due to significant regulatory advancements and an increase in carbon credit supply. These nations have benefitted from early engagement with Article 6, offering investors a first-mover advantage in these evolving markets.
Brazil, for instance, jumped 33 spots due to its surge in carbon credit availability, highlighting its growing role in the market. Big tech companies, including Google, Meta, Microsoft, and Amazon, are pouring millions into Brazil’s carbon credit initiatives.
Looking Ahead: Growth in Compliance Schemes and Restoring VCM Confidence
The Index also underscores the impact of compliance schemes with integrated carbon credit mechanisms on a country’s attractiveness for investments. Countries are increasingly adopting such schemes to meet ambitious international climate targets and respond to mechanisms like the EU Carbon Border Adjustment Mechanism.
Within the voluntary carbon market, challenges abound over the past two years. Certain carbon projects are scrutinized but a renewed focus on carbon removal initiatives is rebuilding trust.
Filmanovic highlighted that Abatable’s Index has been received positively by investors, serving as an important tool in shaping investment sentiment. The growing interest in Article 6.2 credits—allowing cross-border trading of emissions reductions—is seen as a sign of recovery for the market.
Abatable’s 2024 VCM Investment Attractiveness Index serves as a critical tool for de-risking investments and supporting the scaling of global carbon markets.
With countries like Colombia and Kenya leading the way, the voluntary carbon market is set for continued growth, offering both environmental and financial opportunities for investors. As global efforts to curb emissions intensify, these top-ranked nations demonstrate how strategic policies can drive carbon market success.