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Your comprehensive guide to the carbon market

What is the Carbon Credit Market?

Effective incentives for change

The carbon market is a tool providing mechanisms that aim to economically reduce CO2 emissions toward the solution for global warming.

Financial assets with purpose

Carbon credits are issued for each ton of CO2e avoided or sequestrated by accredited projects. Each carbon credit issued has a unique identity and is made available to offset carbon footprints.

A bridge between business and sustainable projects

Companies use this system to invest in forests & offset their emissions. A carbon credit once used (retired) can never be traded again.

Yearly carbon credit market analysis.

2021: Close to 130 Million carbon credits retired.

What? 

As the graph on the left depicts, a large increase in carbon credit retirement in 2021 can be seen.2021 was a busy year of carbon credit trade, as it recorded close to 50% more issuances than the total since the market first began. 

Why? 

New regulations (such as the Paris agreement, COP26) and reports on climate change (such as IPCC), putting unprecedented pressure on companies to achieve the target of Net Zero in 2030, by reducing and eventually offsetting excess emissions. 

What?

Carbon credit issuance activity has been at an all-time high over the past decade, as more governments and independent bodies are developing nature based projects. 


Why?

Due to the high demand of VCUs owing to the commitment of net zero by a large number of companies resulting in higher carbon prices.  In most cases it is now considered more economically beneficial to preserve forest land rather than rely on other sources of forestry income. 

Retirement escalates to match issuance

Monthly analysis.

Retirement escalates to match issuance

What?

As the market grows, newer projects are added to the market. Newer vintages are much higher than older in the current active carbon credits. 

 

Why?

The methodologies to issue carbon credits are evolving, providing more incentives to deal with newer vintages, this helps the market boom, eventually the economic benefits. 

The market shows a growth of newer vintages.

What? 

VCUs are the largest financial instrument for forest based projects, causing higher incentives for preserving forest land. 

 

Why? 

Companies are better incentivised to choose forest based projects, due to the highest associated marginal impact on the environment, biodiversity and community. 

Agricultural Forestry has the highest market presence

01

Tourism & Sustainability

Read to learn more about what the tourism industry is doing to reduce its impact on the climate, and what more can be done.

02

Calculating your footprint

Do you know what it takes to calculate your carbon footprint? Read on to learn how you can estimate your emissions and curb them. 

03

The EU Legislative Proposal

The EU is planning to cut their emissions by 55% by 2030. Read on to learn more about the steps that will lead Europe there. 

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Carbon Market Terminology

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What are Vintages?

Carbon credits have an attribute called "Vintage" that represent the year in which the carbon absoption/ avoidance happened. This aspect is taken in consideration on carbon credit trading and pricing. But that does not affect how the carbon credits can be used.

What does retirement mean?

When a carbon credit is purchased, it is taken off the market, never to be traded or swapped ever again. This process is called retirement. Carbon credits from certified projects have a unique ID that help identify and track the issuance to retirement journey of these credits. 

What is a Carbon Credit?

Environmental projects generate carbon credits by naturally sequestering GHG emissions. Credits are globally recognized certificates allowing entities to compensate for their carbon footprint.The process of credit issuance can take up to 3-5 years, as every single factor of sequestration is considered. 

Monthly analysis.

2022:  Close to 40 Million carbon credits retired by May 

What?

In the first 5 months of 2022, carbon credit retirement saw unprecedented numbers. By May the VCS platform has already retired over 40 million credits globally. 
 

Why?

This is being attributed to the mobilisation of the global economy in 2021, right after the COVID-19 crisis. In addition, close to 3000 companies have committed to setting a net zero target, 19% more than the previous year

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