Purpose and Importance:

Carbon credits can be seen as a company’s voluntary tax on their emissions, channelling funding into projects that reduce or remove carbon from the atmosphere.

The Voluntary Carbon Market (VCM) enables businesses, governments, and individuals to purchase carbon credits to offset their emissions. Carbon credits can be seen as a company’s voluntary tax on their emissions, channelling funding into projects that reduce or remove carbon from the atmosphere.

Companies around the world are under growing pressure to reduce their carbon footprint. After lowering emissions, purchasing high-quality carbon credits to offset remaining emissions is an essential strategy for businesses to make a significant contribution to sustainability.

How it works:

Participants:

Trends and Challenges:

• Growth in Demand: Increasing awareness of climate issues, corporate responsibility and net zero targets, are driving demand for carbon credits.
• Pricing Variability: Prices vary based on project type, location, additionality and co-benefits.
• Quality Concerns:In light of increasing scrutiny on the effectiveness of some carbon credits, project developers are placing extra emphasis on guaranteeing the quality of their projects.
• Regulatory Developments: Governments are beginning to scrutinise and regulate the market to ensure it effectively contributes to climate goals.

Future Outlook:

The market is projected to grow as more entities commit to net-zero targets and as international cooperation on climate action intensifies. However, ongoing improvements in transparency, standardisation, and verification are crucial to its long-term efficacy and credibility.