Top 10 Predictions for Climate and Carbon Markets in 2024

5. Private sector businesses will enhance net-zero strategies 

It will take $4.6 trillion annually by 2030 to reach net zero by 2050. That being said, fewer than 40% of companies across sectors are on track to meet their various sustainability commitments. However, the turbulent years the private sector has faced, coupled with the severe weather events we have mentioned will only amplify net-zero and decarbonization strategies in 2024. 

In ‘The Questions Every CEO Needs to Ask About Sustainability’ the drivers of net-zero strategies are outlined as:

-External demand for carbon neutral products (74%) 

-Industry leadership and positioning (62%)

-Setting the basis for the future (42%). 

Business leaders are continually being held accountable for their organizations impact on climate. It is clear that there is no silver bullet when it comes to net-zero and those in c-level positions will be looking for fully comprehensive solutions that cover multi-level impact. They will need to develop plans that can adapt to current market conditions and make allowances for future crises. 

6. Carbon markets will combine to bring universal standards

Despite some criticism in 2023, there are signs that carbon markets are still high on the agenda for many companies building their net-zero and decarbonization strategies. In December we shared news of the ground-breaking collaboration between some of the Voluntary Carbon Market’s major players ICVCM, VCMI, SBTi and more to unite and help rebuild trust and confidence in the market. 

Several studies have shown that organizations have shared insights that prove companies and organizations who purchase carbon credits are decarbonizing their own supply chains faster than those who don’t. The greenwashing narrative around carbon markets has been written to discredit a market that is actually responsible for channeling millions in global green investment. 

The carbon market collaborations aim to simplify the market landscape, empowering buyers to acquire and retire credits with confidence. In 2024, we can expect these organizations to deliver on their COP28 announcements and provide clear, actionable plans. If successful, the endeavors to merge voluntary and regulated carbon credit actions like these could stabilize demand. This, in turn, would instill the confidence necessary for project developers and investors to scale the supply.

7. Carbon market buyers will seek premium, high-quality credits

Despite controversies, carbon market customers are keen to continue investing in carbon and biodiversity credits and to ensure they are doing so in an authentic and impactful way, they will seek out the highest-quality credits and will be prepared to pay a premium price for greater environmental impact. 

Crucial insights in ‘The State of the Voluntary Carbon Market’ in 2023.’ has shown how the market evolved in 2023 and major players are looking ahead towards a stronger, more resilient 2024. 

Stephen Donofrio, managing director of the report, said: “This is a critical moment for the voluntary carbon markets. While the data do not show the same type of growth by volume present in previous reports, our market analysis shows a critical, increased shift in market behavior towards integrity and quality, shown by an impressive uptick in average credit price. Buyers in the voluntary carbon markets are becoming increasingly sophisticated, and they want to know the true impact of their dollars.”

The report also highlighted carbon pricing, showing carbon credit prices rocketed from $4.04 per tonne in 2021 to $7.37 in 2022, higher than they have been in 15 years. While the VCM was more diverse and with a wider global reach, overall transaction volumes dropped by 51% from a 2021 peak. Issuances and retirements also increased in 2022.

Rather than considering this a “stalling” of the market, researchers interpret it as a “necessary regrouping” before an anticipated “acceleration forward”. The surveyed market participants also reported feeling optimistic about a rebound of the VCM in the near term, with a focus on high-integrity credits. 

The Taskforce on Scaling Voluntary Carbon Markets estimated the VCM to increase 15-fold from 2020 levels and to be worth up to $50 billion by 2030,. Nevertheless, according to Trove, the world needs an additional $90 billion of capital from 2022 to 2030 to achieve the required volume of credits for meeting climate goals. SV Voic

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• Source: https://climatetrade.com/top-10-predictions-for-climate-and-carbon-markets-in-2024/