2024 was a year of contrasts for carbon markets, marked by both historic progress but also enduring uncertainties for buyers and investors.
For international carbon markets, 2024 closed on a positive note. After nearly a decade of complex negotiations, countries agreed to formally operationalize Article 6 of the Paris Agreement—a major milestone for international carbon trade that COP29, hosted by Azerbaijan, will be remembered for.
Meanwhile, the Voluntary Carbon Market (VCM) faced another challenging year with regulatory uncertainty and continued concerns around integrity impacting demand. Despite these risks, the market has remained resilient overall and recorded pockets of growth, pointing to shifting interests and investment strategies by buyers.
So, how has the market performed?
Here are some of the headlines from this year’s edition of the VCM Review:
- The share of recent vintages in annual issuance volumes hit a new high over 2024, representing 90 percent of all issued carbon credits. This came paired with slightly lower absolute issuance volumes against 2023 levels.
- Retirements of credits from cookstove activities nearly doubled year-on-year. Aggregate VCM retirements matched the volumes of the previous three years, and represented 15 percent of all historical retirements recorded in the market since inception.
- Issuances from nature-based carbon removal projects rose to reach a new high, matching avoided emissions volumes for the first time. This points to growing interest in removal credits, positively impacting their valuation.
- Nature-based project types such as Blue Carbon or ARR have observed higher prices. Valuation of most other project categories, however, declined against 2023 levels, with renewable energy and NBS avoided emissions credits reaching lows.
The data presented in the annual VCM Review reports is powered by the Climate Focus VCM Dashboard.
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