Global Carbon market and Features Overview and Forecast 2023-2050

Global Carbon market and Features Overview and Forecast 2023-2050

According to Morgan Stanley research from April 2023, the voluntary carbon offset market (VCM) is expected to grow from $2b in 2020 to around $250b by 2050.

According to the 2022-2023 report published by South Pole, the VCM has experienced significant growth in the past five years, with 252% more retirements since 2017. The VCM is expected to have channeled an estimated $1.3b in investment over 2022, helping to mitigate about 161 Mt of GHG emissions. However, following the invasion of Ukraine, the VCM experienced a slowdown in growth in 2022 compared to the momentum built in 2021. In 2022, the top sectors of carbon credit buyers globally were Energy, Telecom, and Real Estate.

Issuance of carbon credits:

More carbon credits were issued during the first six months of 2022 than in the full years up to 2018, and December 2022 became the month with the highest volume of issuances ever on record. Yet, looking at year-on-year growth, issuances are down.

Most of the near-term supply of nature-based credits will also come from REDD+ or ‘avoided deforestation’ projects. This is because halting deforestation leads to rapid reductions of emissions, while newly planted trees take years to start sequestering carbon. At the same time, credits generated through improved forest management, blue carbon, or soil carbon are limited by challenges related to additionality, aggregation, or a lack of methodologies to generate emission reductions or removals at scale.