According to Ecosystem Marketplace (EM), the voluntary carbon market is projected to achieve a record-breaking milestone of over $1 billion in transactions. The recently published 2021 report highlights that the most active buyers in the market come from sectors such as energy, consumer goods, finance, and insurance. These industries, which heavily rely on infrastructure and technology, face challenges in quickly upgrading their systems to reduce emissions. Carbon offsets offer an immediate solution for these companies to address their carbon footprints while they work on resolving these structural issues.
EM's report also reveals that carbon credit projects and retailers are struggling to meet the increasing demand in a highly competitive market. This scarcity in supply has driven up prices for various types of credits. Since carbon offset projects typically require years to develop, it remains uncertain whether the currently elevated prices will stimulate new supply to meet the demand.
The demand for credits from nature-based solutions continues to be remarkably high. Projects that focus on reducing emissions by protecting or sustainably managing at-risk forests, grasslands, and other ecosystems witnessed a more than twofold increase in demand in 2021 compared to the already record-breaking levels of 2020.
Furthermore, transactions involving REDD+ credits, which generate emissions reductions by utilising carbon finance to safeguard tropical forests from human-caused destruction or degradation, have experienced a notable growth of 280% from 2020 to the year-to-date 2021. Renewable Energy (RE) follows forestry and land use as the second-largest market category.
