The cost of carbon offset could skyrocket 50-fold by mid-century, new research suggests.
BloombergNEF (BNEF) estimates prices for carbon offsets could reach $120 (£88) per tonne.
Carbon offsets are verified actions intended to compensate for the carbon dioxide emissions, equivalent to one tonne of carbon each.
The research found that if the market was restricted to just offsets that remove, store or sequester carbon, there would be insufficient supply to meet the demand, leading to “significant” price hikes.
Kyle Harrison, Head of Sustainability Research at BNEF and the Lead Author of the report, said: “Suppliers, buyers of offsets, traders and investors will need to balance what is idealistic and what is realistic.
“Otherwise, they risk the offset market burning out just as it’s getting started.”