Industry News

Carbon market update: carbon offset retirements surge in 2021 with forestry projects leading the pack

For the first time since 2017, more carbon offsets were retired than were issued in the first quarter of 2021, when compared to the same period in previous years.

As a growing number of companies  commit to achieving net zero, the latest report from Ecosystems Marketplace found that the gap between the number of offset issuances and retirements is starting to shrink.

2021 has already seen some significant developments in carbon markets with the latest figures potentially signalling a change in historic patterns of supply and demand. The number of retirements surged to 81% accounting for 38.6 million tonnes of CO2 emissions in the first quarter (Jan 1 – Mar 31) of 2021 when compared to the same period in 2020.

On the other hand, the number of carbon offset issuances fell by 11.3%. Offset issuances occur when projects have been validated and the removal, avoidance or sequestration of carbon has been verified by an independent auditing body. This means that in Q1 of 2021, there were more carbon offsets that were permanently removed from registries, than were added. 

Forestry leads number of retiring carbon credits and issuances

The report presented market data gathered from the major carbon offset registries including Verra’s Verified Carbon Standard (VCS), American Carbon Registry, Plan Vivo, Gold Standard, Climate Action Reserve and the California Air Resources Board.

Forestry offsets came out on top in both the number of issuances and the number of retirements in the first quarter of the year. 20 million offsets were retired, while 24.9 million were issued.

Compared to the same period in 2020, the number of forestry offset retirements have more than doubled. Compared to the same months of 2019, they have more than quadrupled showing that there was a significant spike in the purchase of these carbon offsets in previous years. Ecosystems Marketplace’s initial analysis of the offset standards’ registry data shows that the increase in forestry offset retirements is a systemic trend, likely to continue.

Issuance and retirement – the supply and demand of carbon offsetting

The carbon market essentially follows the same economic supply and demand principles that all markets do. What’s significant about this surge in offset retirements, is that it could mark a turning point where the demand for offsets is starting to become greater than the supply.

Offsets are retired when an organisation permanently removes them from their designated registry. This essentially takes the carbon offset’s unique serial number out of market circulation and ensures that they can’t be resold.  This is how businesses, individuals and organisations can claim a particular offset’s emissions reductions as part of their carbon cutting plan or carbon neutral targets.

Since additionality is key to providing high-integrity carbon credits , making sure that offsets are retired at the end of their lifetime is a vital part of maintaining the functionality of the carbon market.

With companies continuing to publicise their net zero commitments and governments releasing their Nationally Determined Contributions, the carbon market is likely to see some dynamic shifts in the coming years.

To reduce carbon footprints and show climate leadership companies and countries will need to offset their unavoidable emissions, left over after reducing emissions from business operations.

Forestry projects like Quadriz’ are a valuable way of not only reducing carbon, but protecting endangered wildlife, indigenous communities and promoting biodiversity.

Find out more about our REDD+ projects here.

Sales Enquiries, Contact: 

Nicholas O’Brien
T: +31 263 723 071
M: +34 613 060 968
E:  nick.obrien@quadriz.com

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Quadriz, a leading developer of high-quality carbon offset projects in Paraguay, has been instrumental in shaping the country's carbon market framework, in concert with the Ministry of Environment and Sustainable Development (MADES).
This achievement underscores our unwavering commitment to occupational health and safety, ensuring a safe and secure working environment for all our employees. This milestone represents our dedication to continuous improvement in workplace safety standards.

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