San Jose, CA — VERGE’23 — October 25, 2023 — According to a report released today by Carbon Direct, buying by quality-oriented, removals focused purchasers of carbon credits increased fivefold from 2021 through the first three quarters of 2023, from 3.1 million tonnes to 15.1 million tonnes. At the same time, the analysis found that decreases in REDD+ and renewable energy volumes have driven a drop in issuances and retirements in the voluntary carbon market. Credit issuances—a key indicator of market supply—are on pace to decline by 7% between 2021 and 2023. Retirements—a key indicator of demand—are projected to drop by nearly 25% over the same time period. REDD+ projects in particular have received a significant amount of scrutiny over the past year from outlets including The Guardian and The New Yorker.
“The fivefold increase in purchasing by quality-oriented, removals-focused buyers indicates an important shift in the market,” Matthew Potts, Chief Science Officer at Carbon Direct. “Despite substantial media and academic scrutiny over the past year, the voluntary carbon market remains a critical tool in bringing carbon dioxide removal to scale.”
The 2023 State of the Voluntary Carbon Market report analyzes data from the four largest voluntary offset registries, the developing high-durability registries, and in-depth evaluations conducted by Carbon Direct on hundreds of carbon removal projects. Additional key findings from this year’s analysis include:
Quality remains a key challenge across the market. Within the hundreds of projects that Carbon Direct has analyzed for procurements across all project types, fewer than 10% of projects meet or exceed our standards for highest quality.
REDD+ and renewable energy credits have fallen nearly 20% as a share of total issuances from 72% in 2021 to 53% in 2023.
With the inclusion of REDD+ and RE credits, reduction and avoidance credits account for 90% of all credits on the VCM.
Credits from projects that generated a mixture of removal and reductions make up 7% of issuances. Credits from projects generating only removals remain a minority at 3%.
The volume of retirements for carbon removal credits held steady at around eight million retirements for 2021 and 2022.
To learn more about the latest trends in the voluntary carbon market, read the 2023 report.
About Carbon Direct
Carbon Direct helps organizations go from climate goal to climate action. We combine technology with deep expertise in climate science, policy, and carbon markets to deliver carbon emission footprints, actionable reduction strategies, and high-quality carbon dioxide removal. With Carbon Direct, clients can set and equitably deliver on their climate commitments, streamline compliance, and manage risk through transparency and scientific credibility.
Our expertise is trusted by global climate leaders including Microsoft, American Express, and Alaska Airlines, as well as by the World Economic Forum, which selected Carbon Direct as an Implementation Partner for the First Movers Coalition. To learn more, visit www.carbon-direct.com.
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