The value of the voluntary carbon market that allows polluters to buy credits to offset emissions is set to grow fivefold by 2030, after expanding at a record pace over the past two years, according to Shell Plc.
The global voluntary market is expected to increase from an estimated value of $2 billion in 2021, Shell said in a statement, citing a joint report released with Boston Consulting Group. The compliance market surged to about $850 billion in 2021, more than double the value in the previous year, the report said.
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The so-called compliance markets is where laws require major emitters of greenhouse gases to buy permits or credits, while voluntary markets are for independent entities to purchase for their own use.
“The increase in value and volume, despite the current economic headwinds, is a sign of the growing importance of the voluntary carbon market,” Nick Osborne, general manager for Shell’s global environmental products, said in the statement. “We are seeing a concerted effort from businesses to build sustainable carbon credit strategies that they and their stakeholders have confidence in.”
The voluntary market has expanded rapidly in recent years as countries increasingly set more ambitious climate targets, leading corporate polluters including Shell to buy credits. Still, skepticism has also grown over the credibility of the market, and whether the credits make meaningful impact on removing emissions from the atmosphere.
Shell is a provider of carbon credits, and has used them to offset fossil fuel shipments.
Ensuring integrity through a high-grading of credit quality, as well as compliance regulations, is crucial given that the markets are expected to grow at an accelerated pace, Anders Porsborg-Smith, managing director at BCG, said in the statement.
Demand for some types of credits will start to surpass supply before 2024, faster than Shell and BCG’s earlier forecast, according to the statement.
Read more: Global construction boom hinders push to decarbonize by 2050: UN
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