Rising demand for high-quality carbon credits fuels market growth to $3bn

Rising demand for high-quality carbon credits fuels market growth to $3bn

The voluntary carbon market (VCM) is poised for a banner year, with projections indicating that it could reach a value of $3bn in 2024.

BeZero Carbon, a leading carbon ratings agency, has published new research forecasting that over 250m carbon credits may be retired this year, potentially bringing the market’s value to an unprecedented $3bn. This anticipated growth marks a significant turnaround from the stagnation experienced since 2021 and signals a renewed interest in higher quality carbon credits among market participants.

BeZero Carbon’s latest findings suggest that the VCM is on the verge of a remarkable recovery, set to return to its growth trajectory prior to 2022. The market, currently valued at approximately $2bn annually, stands to benefit from the initial phase of CORSIA’s implementation and the ongoing development of the IC-VCM’s Core Carbon Principles. Moreover, the increasing use of ratings across the sector is expected to play a pivotal role in this upward trend.

The agency employs an eight-point scale to rate carbon credits, assessing their potential to either remove or avoid emitting a tonne of carbon. Recent studies, including this latest research, reveal an emerging correlation between the quality of carbon credits and their market price, with superior quality credits fetching higher prices. This year’s report highlights a significant shift, showing that credits rated BBB or above are being retired at a higher rate than those rated BB or lower, underscoring the market’s growing preference for quality.

Sebastien Cross, co-founder and Chief Innovation Officer at BeZero Carbon, shared his optimism regarding the market’s prospects, stating, “It’s encouraging to see the return of growth to the voluntary carbon market — if the rest of 2024 continues on this trajectory the market will be back on track to realise its multi-billion-dollar potential. Scaling carbon markets is crucial to help finance the climate transition, and our ratings are having their desired effect — helping market participants to make decisions about how to direct capital to where it can have the greatest impact.”

Keep up with all the latest FinTech news here.

Copyright © 2024 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.