The VCM Market Projections (2020-2050)

The Voluntary Carbon Market (VCM) is currently small in relation to anticipated demand. With a demand of 95MtCO2e/yr in 2020, the VCM currently represents only 0.5% of the reductions pledged in country NDCs by 2030, and 0.2% of the reductions needed to achieve the 1.5C Paris temperature goal pathway in 2030.

With increasing pressure on corporations to show climate action, VCM demand is expected to grow x5-10 over the next ten years, x8-20 by 2040, and x10-30 by 2050. With this, the VCM would account for around 5% of the emission reductions required under the country’s NDCs in 2030 and 2% of the reductions required to meet the 1.5C Paris goal pathway in 2030.

Current prices in the VCM are low ($3-5/tCO2e weighted average) and need to increase significantly if they are to have high environmental integrity. Low prices are in part due to an excess of supply in relation to demand. We estimate that without this surplus, prices would be at least $10/tCO2e higher.

With projected increases in VCM demand, average VCM prices should rise to $20- 50/tCO2e by 2030 driving real investment in new projects to reduce emissions. With a further increase in demand by 2040, carbon credit prices would be expected to rise in excess of $50/tCO2e.