A recent report by Abatable, a market intelligence and carbon procurement platform, sheds light on the current state of the voluntary carbon market (VCM). The market is experiencing a pivotal moment, with robust activity in the primary market and significant growth in issuance and projects among the top 25 developers. The landscape of the market underwent substantial changes in 2023, signaling a shift towards a new era of expansion and investment.
Abatable’s Voluntary Carbon Market Developer Overview for 2023-2024 highlights the developers who have capitalized on the influx of capital in 2024 to expand their portfolios. The report utilizes data from over 3,000 project developers contributing to major carbon credit registries, including Verra’s Verified Carbon Standard (VCS), Gold Standard (GS), Climate Action Reserve (CAR), and American Carbon Registry (ACR). It identifies key market themes for 2024 and outlines supply- and demand-side trends that are shaping the market.
The report underscores several crucial factors influencing the market, such as the divergence among developers regarding quality standards, the merging of carbon and biodiversity efforts, and heightened collaboration on corresponding adjustments. These dynamics are expected to have a significant impact on the market throughout the year. Additionally, the report evaluates the alignment of developers with the Core Carbon Principles (CCPs) released by the Integrity Council for the Voluntary Carbon Market (ICVCM) in the previous year, providing insights into potential CCP approval for issuances by developers.
Maria Eugenia Filmanovic, Co-Founder of Abatable, emphasized the importance of staying informed and proactive in addressing challenges to ensure the continued effectiveness of the VCM. She noted the growth and interest in carbon credit initiatives and the move towards greater market integrity, while acknowledging the challenges posed by the forthcoming Core Carbon Principles.
The report delves into the key metrics shaping the VCM, highlighting the rise in market surplus leading to price softening and increased variability, particularly among avoidance credits. Conversely, nature-based removal credits experienced a price increase due to limited supply and strong demand. Despite challenges in the REDD+ market, the study emphasizes the continued dominance of REDD+ in the nature-based VCM sector, with seven of the top 10 largest nature-based VCM project developers actively engaged in REDD+ projects.
The market is projected to face growing oversupply in the coming years, driven by verified projects and those in the verification pipeline. This trend is expected to exert downward pressure on prices unless there is a significant surge in demand. The entry of new, smaller players into the market has led to a decrease in the proportion of credits issued by the top 10 developers, with over 100 new project developers issuing credits in 2023 for the fourth consecutive year.
The report also highlights buyer trends and market concentration, noting a record number of unique buyers entering the market in 2023 and retiring credits for the first time. The market remains concentrated among the top 100 buyers, primarily from emission-intensive sectors like energy, surface transport, and aviation. These companies prioritize mitigating their carbon liabilities, driving their active involvement in the market.
As the voluntary carbon market evolves, stakeholders must remain vigilant in addressing challenges and seizing emerging opportunities. With increased scrutiny and interest from diverse sectors, informed decision-making and proactive engagement are essential for fostering greater market integrity and sustainability.
