The global carbon credit market is projected to experience significant growth starting in 2025, according to a new report by MSCI. The market, valued at $1.5 billion in 2024, is forecast to surge to $35 billion by 2030 and potentially reach $200 billion by 2050 if environmental commitments are upheld.
View from below of green and lush young trees. AI generated picture.
Improvements in credit quality and integrity are driving this shift. MSCI’s analysis shows a sharp decline in the lowest-rated credits (CCC), dropping from 29% in 2022 to 15% in 2024. Meanwhile, high-rated credits (A or AA) have doubled from 6% to 12%. This reflects the rising demand for credible carbon offset projects, particularly those focusing on carbon dioxide removal through engineered and nature-based solutions.
A study of 4,000 voluntary carbon projects found that nearly half of retired credits up to July 2024 originated from lower-rated projects, while high-rated credits remain underrepresented. However, new projects adhering to stricter standards, such as the Core Carbon Principles introduced in 2024, demonstrate increasing integrity.
Read more: Voluntary carbon market sees growth amidst issuance decline
Critics often argue that carbon credits enable companies to avoid reducing emissions. However, MSCI’s data on 8,844 firms from 2017 to 2022 reveals otherwise. Companies using carbon credits performed better on environmental metrics, showing greater transparency, setting credible targets, and reducing Scope 1 and 2 emissions at a median rate of 3.6% annually—more than double the rate of non-users.
While some regions remain cautious about carbon credits for compliance, countries like Australia, South Africa, Colombia, and Singapore have integrated them into tax and trading schemes. Emerging regulations in the UK and the EU hint at further acceptance, potentially boosting the market’s role in global decarbonisation efforts.
Read more: Unlock a green future through sustainable impact investing
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