Buyers

There are two primary types of buyers for offset credits. The first is the “compliance” market, where buyers have a legal mandate to offset their carbon emissions. The second is the “voluntary” market, a group that elects to pursue targets of net carbon reduction.

The compliance market is more established. These buyers purchased roughly 11 billion tonnes of carbon dioxide equivalent (CO2 e) at a value of approximately $850 billion in 2021, representing an increase of 164% from 2020 (European Union’s Emissions Trading System accounted for 90% of global value, with €683 billion of transaction value in 2021). The voluntary market today is much smaller, making purchases of 300 million tons CO2 e at a value of roughly $1 billion. While smaller than the compliance market, the voluntary market is growing significantly faster and is estimated to reach $50-$100 billion of volume per year by 2030. This trend is supported by likely regulations such as carbon taxation. These regulations seek to reduce the cost difference between high- and low-emissions alternatives, which is expected to lower green premiums.

Reference

1 Source: Refinitiv and Reuters, January 31, 2022.

2 Source: Ecosystem Marketplace, November 10, 2021.