![]() Nature-based solutions account for 40% of the cumulative issuance of carbon credits at present. Most future supply of carbon offsets is likely to originate from nature-based projects over the next ten years, absent technical innovations in carbon sequestration. There is no unique price for carbon credits, as each transaction differs due to idiosyncratic factors such as the preference of the market participants for specific registry standards, the vintage year (see later explanation) of the carbon credits, the size of the transaction itself, the geography and the category of the projects. Indeed, offsetting unavoidable emissions through a carbon crediting market may be a reasonable alternative to facilitate and ensure the undertaking of actions toward decarbonization by hard-to-abate industries. Financial institutions and big oil were the most active buyers of carbon credits, accounting for 25% and 20% of the total retirements, respectively. was home to most of the buyers of carbon credits, followed by Western Europe. Through 2021, cumulative issuance and retirements of independent carbon credits outpaced any other year on record, close to 300Mt and 120Mt respectively. In more recent years it has made a comeback as market participants increasingly recognize its pivotal role in addressing climate change. The market for carbon credits first sprang up in the 1970s but failed to ignite amid doubts about greenwashing and structural imbalances. Furthermore, COP26 has paved the way for the establishment of a global carbon emissions market through marketing of carbon offsets. ![]() The estimate comes as new regulations force more companies to abide by established obligations or voluntarily adopt stricter environmental targets. Citi analysts estimate the market value of international and independent carbon credit markets doubled last year to over $1 billion. And they say that depending on price trajectory, increasing supply and demand of carbon offsets could boost the size of the market to $50-to-over $100 billion by 2030. The global market for carbon credits could be on the cusp of spectacular growth. ![]()
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