A new report from BloombergNEF states the total value of carbon credits produced and sold to help companies and individuals meet their de-carbonization goals could approach $1 trillion as soon as 2037.
“Doubts over credit quality and climate impact gave investors pause in 2022, but long-term demand could still drive massive growth”— BloombergNEF
This is similar to an argument (listen to our latest podcast, The road ahead for Carbon Credits) we have made on The Oregon Group to investors: stay focused on high quality carbon credits.
Looking to 2050, BNEF modeled supply, demand and prices for carbon offsets under three potential scenarios.
- in the voluntary market scenario, companies could purchase any type of carbon offset to achieve their net-zero goals and would need 5.4 billion offsets annually in 2050. The market would be valued at $15 billion annually in 2030 in this scenario – up from estimates of $2 billion today
- under the removal scenario, the supply-demand balance would be much tighter as only offsets from projects that actually removed carbon from the atmosphere would be allowed to count. Carbon offset prices would soar above $250/ton with the annual market reaching nearly $1 trillion
- the third bifurcation scenario assumes the debate effectively splits the market into two pieces. One is a smaller, less liquid market for high-quality offsets, including technology-based removal and nature-based solutions in Africa, North America and Oceania. Prices peak at $38/ton in 2039 before dropping to $32/ton in 2050
For interested investors, read our introduction to the Voluntary Carbon Credit Markets.