Record Year for Credit Retirements Despite Challenges
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The voluntary carbon market has experienced significant growth in the first four months of 2024, with credit retirements on track for a record-breaking year. Despite facing a wave of bad press and controversies, the market has seen a substantial increase in credit retirements, indicating strong demand for carbon credits.
Record Credit Retirements
Credit retirements from the four main standard bodies (Verra, Gold Standard, ACR, and Climate Action Reserve) totaled 66.1 million credits from January to April 2024. This marks a 15.8% increase compared to the same period in 2023. The average weekly credit retirement stands at almost 3.7 million, a 23% increase from 2023.
Graph 1: Credits Retired, Issued, and Canceled in 2023 and 2024 (Source - Carbon Pulse)
Potential for a Record Year
If the current rate of retirements persists, the four main standard bodies are projected to retire over 190 million credits in 2024. This would be significantly higher than the 155.6 million credits retired in 2023.
Supply Side Challenges
On the supply side, the first four months of 2024 saw a collective issuance of 86.2 million credits, a 12.2% decrease compared to the same period in 2023.
Graph 2: Non-Retired Credits in 2023 & 2024
The average weekly credit issuance is 4.8 million, a 10.4% drop from 2023.
Market Dynamics
Despite the increase in credit retirements, the market is facing challenges. A high-profile documentary raised concerns about financial mismanagement and poor forestry project governance.
Additionally, controversies like the revocation of Indonesia’s Rimba Raya REDD+ project license have impacted market sentiment.
ICVCM and Core Carbon Principles (CCP)
The market is anticipating the introduction of Core Carbon Principle (CCP) integrity-labeled methodologies, which have been delayed until June.
CCP-labeled credits are expected to trade at a premium, offering a solution to issues of transparency and integrity in the market.
Conclusion
Despite facing challenges and controversies, the voluntary carbon market is experiencing a record year for credit retirements. The increasing demand for carbon credits underscores the market's importance in combating climate change and achieving sustainability goals.
