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Voluntary carbon market grows 6% on year in 2019: Ecosystem Marketplace

Highlights

Transaction volume reaches record 104 mil mt CO2e in 2019

Growth continuing in 2020 despite pandemic lockdowns

Nature-based offset projects see prices rise 30%

London — The value of the global voluntary carbon market increased by 6% year on year in 2019, according to a report by environmental markets information group Ecosystem Marketplace.

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While average carbon offset prices were unchanged in 2019, prices increased 30% for nature-based emissions projects, according to the report released Sept. 21.

"In order to deliver deep and cost-effective [emissions] reductions now, many companies have pledged to become carbon neutral in the near term by financing emissions-reductions elsewhere – or in climate parlance, 'offsetting' any emissions they can't yet eliminate," said Ecosystem Marketplace.

"As a result, we are seeing near-record volumes being transacted in the voluntary carbon markets, despite the global COVID-19 pandemic," said the group, an initiative of non-profit organization, Forest Trends.

Corporate carbon-neutral pledges fueled a record transaction volume of at least 104 million mt of CO2 equivalent in 2019, an increase of 6% over 2018, it said. The group's figures are based on surveys of voluntary carbon market participants.

The annual volume figure may increase in updates expected in 2020, as 14 survey respondents, who account for a combined 13 million mt CO2e, did not provide data for 2019, it said.

The growth trend has also continued into 2020, and anecdotal evidence based on interviews with market participants suggests the total volume may rise to a new record in 2020, despite the coronavirus pandemic-induced lockdowns around the world, it said.

Following the peak of the lockdowns, there were fears emissions would rebound, and that new voluntary corporate climate pledges would be put on hold, it said.

"When we conducted a survey of market participants in April, however, we found something astonishing: while participants feared the worst as airlines rolled back their purchases to match lower emissions, broader corporate demand for voluntary carbon offsets were increasing," said Ecosystem Marketplace.

"Then, as the year progressed, so did the number of carbon-neutral pledges from individual companies like Amazon and Microsoft – pledges that have since proliferated among companies that had never taken climate action before," it said.

Average offset prices stay flat, but rise for nature-based projects

While average carbon offset prices were unchanged in 2019 from the previous year, a wide spread of prices continued to emerge, with certain project types attracting significantly higher prices compared with the previous year.

"Average offset prices remained flat in 2019, but with wide variance by type," Ecosystem Marketplace said in the report.

"Prices for offsets associated with Nature-Based Solutions (NBS) and Natural Climate Solutions (NCS), for example, increased 30%, while prices for offsets from renewable energy decreased 16%," it said.

Prices and volumes moved in opposite directions for these major project types. The volume of credits from agriculture, forestry and other land use projects dropped 28%, while renewable energy-based volume surged 78%, it said.

Despite the decrease in volume, the market value of agriculture, forestry and land use offsets was more than twice that of renewable energy, suggesting an ongoing differentiation in price, with credits seen as having strong environmental credentials attracting premiums compared with other types.

Demand for offsets associated with forest management in developing countries remains especially strong, the group said in the report.

The cumulative market volume in the voluntary carbon market topped 1.3 billion mt CO2 equivalent in 2019, with the value exceeding $5.5 billion, it said.

Average carbon offset prices ranged from $1.40/mt for renewable energy projects through to $4.30/mt at the higher end for forestry and land use projects, according to the report.

Voluntary carbon market volume and price 2019
Volume (mil mt CO2e)
Average price
Value (mil)
Renewable energy
42.4
$1.40
$60.1
Forestry and land use
36.7
$4.30
$159.1
Waste disposal
7.3
$2.50
$18.0
Household devices
6.4
$3.80
$24.8
Chemical processes/industrial manufacturing
4.1
$1.90
$7.7
Energy efficiency/fuel switching
3.1
$3.90
$11.9
Transportation
0.4
$1.70
$0.7
Source: Ecosystem Marketplace