Voluntary Carbon Markets to Exceed >US$1B in 2021

Proportion of Value of VCM transactions by Project Category, 2021E

Key Points: Growth of at least 30% year-over-year in 2021 in voluntary carbon trading reflects increased demand for carbon offsets from corporations. Volume, at just under 300 Million tons of CO2-equivalent, marks progress towards the Taskforce on Scaling Voluntary Carbon Market’s view that 1 Gigaton of offsets is needed by 2030 to support Net Zero Pathway progress. Voluntary offsets remain inexpensive at an average below $3.50/ton.

Voluntary carbon trading transactions to exceed US$1 Billion for the first time in 2021, as compiled by Ecosystem Marketplace (EM). Transactions of $1.0B, which will end up higher as responses were received in November, rose 30% year-over-year, split relatively evenly between volume, which was ~300 Million tons of CO2 equivalent for the year, and price gains.

Forestry and Land Use dominates the totals and is more highly valued. By Project Category, Forestry and Land Use (primarily REDD+) led credits on a volume basis (54%¹) and carried above average pricing (~$5/ton). Renewable Energy followed on a volume basis but carried significantly below average pricing (36% of volume at ~$1.30/ton). This preference for Forestry/land Use is expressed even more strongly in select markets. For example the Nature-Based Global Emissions Offset™, traded on the CBL, which meets Verra climate standards, traded as high as $15/ton in the last two months of 2021 following its launch in August.

For reference, mandatory markets have consistently higher prices, led by European Union Allowances (~$60/ton average in 2021 and current price is just under $100/ton).

Details about the voluntary carbon market data. The Ecosystem Marketplace (EM) data reflects responses from 180 participants across 14 exchanges. Founded in 2005, EM’s Global Carbon Hub claims to be the only independent international voluntary carbon offset tracking and reporting mechanism.

2/2/2022