A Barclays report has estimated that the current worth of the voluntary carbon market, which is less than $500m annually, could reach up to $1.5tn by the year 2050.
Barclays has predicted that the flourishing voluntary carbon market could hit a worth of $250bn annually by 2030 and will continue to grow to a colossal $1.5tn yearly by 2050.
The banking giant recently released a report stating that the worth of the global market for carbon offset credits, which is not managed or liquid, is only $500 million. Furthermore, as corporations must be more aware of their carbon footprint and meet their carbon neutrality objectives, the number of carbon credits sold on the voluntary market has increased by seventy in the past ten years.
It has been suggested that the worldwide voluntary carbon market is likely to hit a "tipping point" in the near future, which would cause the carbon offset credits trade to experience a surge over the ensuing years, turning it into a trillion-dollar enterprise by the mid-century. Barclays had originally pinpointed the time between late 2022 and 2023 as the probable tipping point for voluntary carbon markets in 2020.
Investment Sciences at Barclays studied three major carbon credit registries from 2008 to 2023, which included more than 1.6 billion issued CO2 credits and 755 million credits retired. They discovered renewables were the leading source of offsets up to this point, with agricultural credits also increasing.
Nevertheless, the most significant expansion in 2023 has been in offsets requested voluntarily, not to fulfil mandatory emissions reduction requirements.
In conclusion, Barclays revealed that Delta Air Lines, Volkswagen, Shell, Primax Colombia and Telstra Corp. were the top five purchasers of carbon offsets in terms of volume.
This week, Barclays revealed their top 100 offset buyers list with some familiar names, including Boeing, Easyjet, Jet2, AirFrance, Disney, Nespresso, Etsy, Netflix, Apple, Octopus and BrewDog.
The bank cautioned, however, that the environment and biodiversity are still an "unanswered portion of the net zero challenge", pointing out the potential for the voluntary carbon market to exploit biodiversity-connected investments, as corporate enthusiasm for assisting nature and the part of nature-centred climate solutions in achieving net zero increases.
Four sectors - energy, finance, agriculture and agricultural tech, monitoring and verification - have been identified as likely to gain the most from biodiversity investments. Yet, companies who invest in nature-based solutions now may have to endure lower offset costs in the future.
Barclays asserted that reducing emissions should be the foremost concern of the public, governmental organizations and corporations. Yet, there are still some industries where emissions cannot be eliminated, and in these cases, offsetting any remaining emissions is necessary to reach climate objectives.
The report noted that "It is preferable to take action rather than remain inactive" and that the potential of forestry, carbon farming, and blue carbon could reach up to 12GT annually. Moreover, the market could expand to more than 15GT if emerging technologies such as Direct Air Capture with Carbon Storage and Bioenergy with Carbon Capture and Storage credits are included.
The report contends that voluntary carbon markets could aid in hastening progress towards net zero objectives by functioning as a conduit for private investment to be directed to developing nations. It also stated that a well-defined set of standards and verification processes, like the Core Carbon Principles spearheaded by the Integrity Council for Voluntary Carbon Markets in March, may enable the market to be a significant factor in expediting the least-cost decarbonization.
The document argues that neglecting to provide financial support for adaptation in emerging countries is a severe source of danger due to climate change since this is where emissions are expected to increase considerably and, thus, investments have the potential to have the most significant effect in terms of reducing emissions - especially in areas like transitioning away from coal.
The market for voluntary carbon credits offers a financial incentive for policymakers to safeguard carbon sinks, thereby producing additional beneficial environmental results and providing positive co-benefits for biodiversity.
Heavy Finance, a European climate tech investment platform for the agricultural sector, has declared its objective to generate 250,000 carbon credits across the UK and Europe by 2024. This announcement was made in connection with today's news on carbon credits.
It is expected that 250,000 tonnes of CO2 will be taken out of the air via carbon credits, with the initial focus being Poland, Lithuania and Bulgaria. The plan is to extend this to other European countries in the following 18 months.
HeavyFinance stated that by investing, they plan to support no-tillage and sustainable farming techniques to reduce CO2 and solve food scarcity in Europe.