Potential increases in price to $238 (£188) per tonne by 2050 are highlighted in BloombergNEF‘s Long-Term Carbon Offsets Outlook 2024, as carbon credits face a pivotal test.
The voluntary carbon market, where verified emission reduction credits are traded, saw challenges in 2023 due to scrutiny and reputational issues.
According to the report, the market’s success hinges on the strength of demand and credibility of credits.
While 2023 saw a record annual demand, up by only 2% from the previous peak in 2021, the market remains oversupplied by nearly 50%.
Many companies have shown reluctance to purchase offsets amidst criticism and rising prices.
Kyle Harrison, Head of Sustainability Research at BNEF and the lead author of the report, said: “There is no shortage of governments and investors that are eager to monetise emission reductions through carbon credits and channel financing towards projects.
“But if buyers can’t trust the quality of the credits they’re buying and risk greenwashing accusations, then the market will never reach its potential. Credits will never be more than discretionary spend in this case.”
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