Annual market value for the Voluntary Carbon Markets (VCM) is projected to hit the $1 billion milestone according to the report, The report’s findings are a strong signal of confidence in the sector, with 2021 topping 2008 as the highest annual value ever tracked. All-time market value has also grown to $6.7 billion in total.
State of the Voluntary Carbon Markets 2021
The market volumes new highs are year-on-year with 2020 and 2021 both recording record numbers of MtCO2e. In 2020 188.2 MtCO2e were tracked, setting a new record after the highs experienced in 2008. In 2021, after just eight months trading volumes of carbon offsets in the voluntary market have already smashed through the record sed in 2020 by 27% to reach 239.3 MtCO2e.
This is a particularly interesting insight, as economies around the globe attempt to rebalance and stabilise following the COVID-19 pandemic, and could suggest a renewed interest in economic tools to drive climate action.
In a statement released by Ecosystems Marketplace, Director and Lead Report Author Stephen Donofrio said, “The markets are on track to hit $1 billion in transactions this year if current levels of activity and growth continue. It’s not just companies who are buying carbon credits as a small piece of their corporate net-zero 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.”
Forestry projects retain top spot as most popular project category
Forestry and Land Use carbon projects, such as Quadriz’ REDD+ project in the Paraguayan Chaco, have long held the top spot as one of the leading categories of projects and 2021 was no different. Carbon offset volumes from forestry projects rocketed in the first eight months of the year, with REDD+ projects specifically seeing a dramatic boost, with a 972% increase in avoided planned deforestation projects.
The report shows continued, significant buyer interest in purchasing carbon credits generated by REDD+ projects, which have co-benefits ranging from biodiversity conservation to improved economic opportunities employment related to conservation.
“We are experiencing a clear spike in demand and interest for high-quality REDD+ offsets. There is a growing confidence surrounding the voluntary carbon market, and a clear tendency with corporate net-zero pledges as well as Climate Asset investors taking early stakes in projects, which is boosting demand.” said Christian Nielsen, Head of Sales, Carbon offsets at Quadriz.
The Corazón Verde del Chaco Project
Quadriz’ Forestry carbon project conserves 32,000 hectares of critical Chaco forest, designed under two leading carbon standards, the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity Standard (CCBS) with anticipated Gold Distinction for exceptional biodiversity benefits.
The Corazón Verde del Chaco Project simultaneously preserves endangered species and a wide range of ecosystems, provide an economic alternative to local communities, and mitigate the release of several millions of metric tonnes of carbon dioxide emissions over the lifetime of the Project.
Looking ahead, new requirements for REDD+ baselines announced by Verra may affect REDD+ volumes in the future, both for new projects and those renewing their baselines as part of Verra’s rule requiring baseline updates every ten years.
The future of the carbon markets
Ecosystem Marketplace is an initiative of the Forest Trends Association. Forest Trends conserves forests and ecosystems by creating and accelerating the adoption of environmental finance, markets and other payment incentives. The Ecosystem Marketplace report is widely regarded as the leading data publisher on the VCM.
In addition to the Ecosystems Marketplace report, the Bank of America has predicted the future of the carbon markets is set for even further growth. The latest Bank of America Global Research estimates that in order for countries to reach their net zero emissions targets, the carbon offset market may need to grow by up to 50 times. The same research showed that 7.6 giga tonnes of carbon dioxide offsets will be needed to fulfil demand to meet net-zero emissions by 2050. This is equivalent to a fiftyfold increase in the current offset market, with the lower end of the growth in demand for offsets amounting to at least quadrupling. Currently forestry, land use and renewable energy projects are about 80% of carbon offset projects, with trends suggesting growing interest in nature-based solutions such as Quadriz’ offset projects.