2023 will enter the books as a challenging year for the Voluntary Carbon Market (VCM). With so many uncertainties, how has the market performed?
Here are some of the headlines from this year’s edition of the VCM Review (for Climate Focus’ full analysis of 2023, access the report here):
- 2023 marked a retreat from the 2021/2022 peaks in carbon credit issuances. However, the role of newer vintages increased both in absolute and relative terms over the past year.
- Prices declined across the board. Willingness to pay for high-quality projects, however, remained as evidenced by over-the-counter transactions witnessed over the past year.
- Despite the challenges of 2023, buyers continued using carbon credits as part of corporate climate strategies. Total retirements matched the volumes of the previous two years and represented nearly 20 percent of all historical retirements in the VCM.
- We expect the market to consolidate in 2024, with progress on the definition and use of high-integrity carbon credits, guidance on claims, and further clarity around the role of carbon credits in corporate climate strategies offering opportunities for the market to pick up the momentum again.