Last year, the annual market value for the voluntary carbon markets crossed the 1$ billion mark for the first time. It is evident that 2021 marked as a record setting year for the voluntary market with new records of carbon credits traded and prices reaching all-time highs. For Verra, issuances and retirements doubled the amount compared to 2020. At the end of the year, December 2021 retirement reached a record high of 21 million credits in one month.

Finishing 2021 with an all time high is one indicator that this on-going demand will continue to increase in 2022. COP26 is also another event calling upon corporations and national governments to revise their carbon neutrality goals and set even more ambitious ones this year. For this reason, in the coming year, more volume is expected to be issued to meet increasing demands. The LEAF coalition agreed during COP26 to finance REDD+ projects in Ghana, Costa Rica, Ecuador, Vietnam, and Nepal with a promise for further financing agreements with project developers to be reached this year.

2022 will witness more businesses committing to net-zero, higher quality carbon projects, and a growing rise in demand for credits.

All signs from the past year indicate a clear surge in 2022, according to S&P Global Platts, the demand for credits is expected to increase in Q1 2022 but reach new records by Q4 2022. This expected increase in demand and supply is not only due to the urgency of meeting the Paris Agreement goals, but also because of the heightening credibility and clarity within the voluntary carbon market. After many years of negotiation, reaching a final agreement on Article 6 is expected to grow the usage of offsets as a trusted tool to reach decarbonization and mitigate climate change. Similarly, the increasing credibility of the market is also due to new regulations ensuring the quality of the carbon credits traded within the market. In April 2022, the Voluntary Carbon Markets Integrity initiative finalizes its guidance allowing standards more clarity on regulations regarding issuance of credits.

The rising awareness about carbon offsetting is inviting new sectors to join the mission towards a net-zero economy. For this reason, Science Based Targets (SBTi) will be launching sector-based guidance tools to encourage new companies and welcome new sectors, such as the chemicals industry and its sub-sectors. To further encourage companies to set their targets and commit to halve their emissions by 2030, this year SBTi will be publishing their annual Progress Report which showcases the impact of the corporate SBTi targets set so far. Likewise, by the end of Q4 2022 SBTi will be launching a Measurement, Reporting, and Verification (MRV) Framework and Protocol.  This framework will provide a “standardized and robust mechanism to track organizations’ progress against science-based targets”. Such frameworks increase the credibility of offsetting, therefore there is no doubt that 2022 will witness more businesses committing to net-zero, higher quality carbon projects, and a growing rise in demand for credits.