Carbon credits 2.0

It's that time of year when ratings agencies and data aggregators voice their opinions on what's been driving the verified carbon market (VCM). At least that's what it feels like based on the plethora of reports published in the past couple of weeks.

In this article I try and tease out some of the main conclusions from the six major reports, highlighting recent trends in carbon credit demand and supply, and what it might all mean for where the market is now headed.

Overall, the reports signal that a bifurcated market is developing, one in which high integrity credits are highly valued and in short supply, and where buyers are focusing on developing long-term relationships with project developers.

Meanwhile, although corporate demand is growing and set to rise further as reputational risks are more actively managed, the real growth driver will come from compliance carbon markets, both domestic emission trading schemes and global mechanisms such as CORSIA.

Let's dive in and see how the carbon market is coming of age.