This past year, 2024, has shaped up to be another evolving year for Carbon Markets. New agreements governing carbon markets have been laid down in Baku at COP29. Two new entities are providing their documented quality frameworks for buyers and carbon market providers. For important project types, Nature-based solutions continue to take the lead, while there is an increasing interest in direct CO2 capture and permanent storage methods. The Carbon Markets will assuredly grow, with a new invigorated effort, as the marketplace comes out from under criticism leveled in the previous year or two. Some of this criticism was warranted, much of it was not, yet a lot of “clicks” were indeed generated.
COP29 in Baku addressed carbon market issues. Participating countries reached consensus on guidelines under Article 6.2 of the Paris Agreement. The agreement provides clarity on how nations will authorize the trade of carbon credits and outlines the operation of registries to track these transactions. It ensures environmental integrity through transparent technical reviews, promoting accountability and trust in the system. Registries like Verra acknowledge article 6.2 compliance and are working with jurisdictions making sure of smooth integration with the existing carbon market infrastructure. Baku also came to an agreement on Article 6.4, with the UN to establish the Paris Agreement Crediting Mechanism (PACM). This better enables country to country cooperation in verifiable emissions trading.
Two new organizations, the Voluntary Carbon Markets Integrity Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market (ICVCM) are publishing guidance and principals. Carbon Market integrity has always been guided at the basic level by ISO Standards with ISO 14064-3: Specification with guidance for the verification and validation of greenhouse gas statements, being one of several key internationally agreed upon standards. Carbon Markets continue to become more and more important as the world continues to miss our GHG reduction targets. We see the press getting ahold of these project issues and as they should. Highlighting instances of market missteps are often reported on as a perceived failure of the marketplace, in general. This is far from the case.
The GHG Registries, who manage the acceptance and continued integrity of carbon projects, did the right thing. Criticism was addressed using the best available science, defending projects where appropriate, and conceding improved guidance and protocols where relevant. When needed, projects were put on hold and investigated. Sometimes discovered carbon credit deficits are remedied by the retirement of reserve credits, sometimes legal action is taken, other times projects are reinstated as issues are resolved or found to be unwarranted. All the while, methodologies are reviewed and improved. Keen oversite is supposed to happen, missteps are expected as humans continue to be humans. Overall, carbon markets are functioning as they should. While the new watchword of the marketplace is now quality and integrity! This tightening of market quality is good, bringing confidence to the expected growth, ahead.
The voluntary carbon market is reported to be $2B, projected to be a $30B market in 2030. Considering that only 10-15% of businesses voluntarily purchase carbon credits as part of their carbon reduction efforts, we will see exceptional room for growth ahead. New innovative technologies and new and expanding partnerships will grow this marketplace. Nature-based solutions, and Carbon Capture and Storage (CCS) will be two sectors that will be leading carbon market growth. Projects that sequester carbon will continue to dominate over project methodologies that simply avoid carbon emissions.
Nature-based solutions provide for sustainable land stewardship. These projects carry a wealth of co-benefits from biodiversity, environmental services, community economic growth, positive childhood health outcomes, empowering women, and beyond. Projects employ the latest in technologies, AI and sophisticated remote sensing, while respecting and often integrating project activities with indigenous communities and other local populations. CCS solutions are inherently innovative and can form the basis of a durable solution. Looking ahead, solutions for low carbon fuel management, biochar and other new methodologies will be taking hold in the voluntary carbon markets in 2025 and beyond.
Evergreen Carbon got started in 2014 with the idea of promoting meaningful and worthwhile carbon projects, and we look forward to more opportunities to help our clients maneuver through the evolving carbon markets, as more and more businesses are driven to take more and more responsibility for their own carbon emissions management. Following market innovations, Evergreen Carbon continues to provide a curated bespoke carbon credit purchase. It is a maze out there, with new project methodologies and even new registries coming online to service this broadening carbon market.
