A new report from Sylvera, a carbon data platform, reveals a growing willingness among carbon credit buyers to pay higher prices for projects delivering robust environmental benefits. This shift comes as the voluntary carbon market grapples with credibility issues that have sparked hesitancy among some buyers.
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Sylvera’s State of Carbon Credits 2024 Report shows that while total carbon credit purchases grew marginally by 0.2% compared to 2023, the market has largely plateaued since 2021. Despite this, retirements of credits—indicating their environmental benefits have been fulfilled—increased significantly for high-credibility projects rated BB or above. These retirements rose 25%, from 33.4 million credits in 2023 to 41.7 million in 2024.
In contrast, retirements from low-quality projects rated D more than halved, reflecting a market shift away from risky or less reliable initiatives. Buyers are increasingly avoiding projects prone to overcrediting, double counting, or permanence risks, according to Sylvera’s CEO Allister Furey.
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Furey emphasised that companies are more discerning, screening out high-risk projects or entire categories. The willingness to pay a $5 premium per rating band, equating to $35 more for top-rated credits compared to the lowest-rated ones, underlines a prioritisation of quality over cost.
The report also notes market fragmentation, with some buyers overpaying for credits. However, the convergence of voluntary and compliance markets—such as under the Paris Agreement's Article 6.4 and aviation sector-specific schemes like CORSIA—could intensify competition for high-quality credits. As demand for credible carbon credits grows, Sylvera predicts a sustained shift toward quality, further reshaping the market landscape.
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