DGB Group N.V. (“DGB”, “the Group”, or “the Company”) (Euronext: DGB: NL000916951), a leading carbon project developer and ecosystem restoration company, publishes its quarterly outlook of the voluntary (verified) carbon market (“VCM”). The VCM has experienced notable growth and significant developments in recent months, underpinned by strong corporate commitments and evolving regulatory frameworks.
Key highlights
- Market growth and value: The VCM has seen substantial growth over the past five years. Although the market growth slowed slightly in 2023, experts anticipate an increase in momentum —with a potential value of $21.7 billion by 2032—driven by rising corporate commitments to achieve net-zero targets and the implementation of new compliance regimes across various jurisdictions. The inclusion by the Science Based Targets initiative (SBTi) of environmental attribute certificates for Scope 3 emissions compensation, could be a pivotal driver of the VCM’s projected growth.
- Corporate climate ambitions: As companies strive to meet net-zero targets, the demand for carbon credits (or carbon units) is set to increase. Companies like Microsoft and Google significantly increased their investments in carbon credits to meet sustainability goals, with Microsoft concluding the largest credit purchase to date. Market transparency improvements could significantly impact participation and investment in carbon credits, potentially doubling participation among companies not currently in the market and increasing spending by 10% among existing participants within the next two years.
- Compliance markets: The expansion of compliance markets is likely to drive the growth of the voluntary markets, with more jurisdictions expected to implement regulatory frameworks. Over the last years the lines between VCM and compliance markets have blurred as programmes like the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), now accept credits from voluntary mechanisms.
- Investor interest: Financial investors and corporate leaders are looking to capitalise on the future growth of the market, which is expected to see carbon trading as a valuable commodity. Investments in carbon credit projects have shown momentum in the last few years, with $36 billion allocated to over 7,000 projects from 2012 to 2022, and $17 billion invested between 2021 and 2023.
- Quality and premiums: During 2023, prices for ARR credits rose 31% and data shows there is more interest and investment in credits from nature-based and community-focused projects with environmental and social benefits. With the Integrity Council for the Voluntary Carbon Market's introduction of the Core Carbon Principle (CCP) to enhance transparency, carbon credits could see price hikes of $10 or more.
- Project types and benefits: Nature-based solutions projects are favoured, contributing to biodiversity and providing social and economic benefits for local communities. In 2023, VCM buyers paid a 245% premium for carbon removal credits over reduction credits, up from 152% in 2022, showing a strong preference for removal projects. By the end of 2023, nature-based project credits commanded a 91% premium over engineered-project-type credits. Credits from projects with co-benefits had a premium of 37%, and credits linked to SDGs had a premium of 34%.
- Global market trends: The global market for carbon credits is poised to reach $100 billion annually between 2030 and 2035, with $11 billion currently invested in nature-based initiatives. This potential growth is attributed to rising interest from corporate buyers. The convergence of compliance and voluntary markets is expected to drive further investment and innovation, leading to better quality standards and increased competition. This integration is anticipated to help streamline market operations and foster greater investor confidence.
VCM outlook and pricing expectations
The VCM’s potential 2030 market size predictions range from $5 billion to $250 billion, all indicating growth:
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Carbon credit prices are predicted to increase, especially among nature-based credits:
“Experts predict significant market growth driven by rising corporate commitments and new compliance regimes. The VCM is expected to see enhanced rigour, better quality standards, and increased competition, fostering greater investor confidence. The carbon market is poised for continued growth and development, supported by strong corporate climate ambitions and evolving regulatory landscapes. As the market matures, high-quality and nature-based carbon credits are expected to command premium prices, further incentivising investment in sustainable and impactful carbon reduction projects.” - CEO Selwyn Duijvestijn
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Disclaimer
This press release does not contain an (invitation to make an) offer to buy or sell or otherwise acquire or subscribe to shares in DGB and is not an advice or recommendation to take or refrain from taking any action. This press release contains statements that could be construed as forward-looking statements, including about the financial position of DGB, the results it achieved and the business(es) it runs. Forward-looking statements are all statements that do not relate to historical facts. These statements are based on information currently available and forecasts and estimates made by DGB’s management. Although DGB believes that these statements are based on reasonable assumptions, it cannot guarantee that the ultimate results will not differ materially from those statements that could be construed as forward-looking statements. Factors that may lead to or contribute to differences in current expectations include, but are not limited to: developments in legislation, technology, tax, regulation, stock market price fluctuations, legal proceedings, regulatory investigations, competitive relationships and general economic conditions. These and other factors, risks and uncertainties that may affect any forward-looking statement or the actual results of DGB are discussed in the annual report. The forward-looking statements in this document speak only as of the date of this document. Subject to any legal obligation, DGB assumes no obligation or responsibility to update the forward-looking statements contained in this document, whether related to new information, future events or otherwise. The provision of DGB’s services and products is subject to its General Terms and Conditions.
