New research finds investment into carbon projects totals more than $36 billion since 2012 with another $3 billion in future investment already committed
GENEVA, 14 September – A new study by Trove Research finds that investment into carbon credit projects between 2012 and 2022 totalled $36 billion, with half of this occurring in the last three years and more than $3 billion in future investment already committed. This new wave of investment will deliver more than a thousand new carbon reduction projects, ranging from forest protection to carbon capture and storage, and will provide a growing stream of carbon credits that corporates can use in their decarbonisation efforts.
Purchasing carbon credits, which fund projects around the world like protecting rainforests from deforestation or providing clean cooking stoves, is one of the most established and scalable ways to channel finance to effective climate outcomes. As a result, the voluntary carbon market has experienced explosive growth since nations agreed in 2021 on a set of guidelines for the global carbon credit market under Article 6 of the Paris Agreement. Countries are busy setting out the legal framework for a UN-regulated market in carbon credits, while also putting in place the structures to support climate investment on the ground.
Progress on the regulatory side has triggered a wave of financial commitments in carbon abatement. More than $18 billion of investment capital has been raised to invest in carbon credit funds in the last two and a half years alone, according to the survey, commissioned by IETA, Verra and Sylvera.
Over 80% of this funding is targeted in nature-based projects such as afforestation/reforestation, improved forest management and reducing emissions from deforestation and forest degradation, the research found. A total of 246 nature-based projects currently cover a total area of 30 million hectares, roughly the same as Italy’s landmass.
Guy Turner, CEO of Trove Research and lead author said: ”This new analysis shows how committed investors have been to developing new, high quality projects to meet future corporate decarbonisation needs. Corporates will have a huge variety of projects to choose from to deliver both emission savings and natural ecosystem protection.”
The survey found that since 2020 more than 1,500 new carbon credit projects have been developed and registered with the five leading carbon registries. This represents an increase of about 160% in the rate of registration compared to the 2012-2020 period.
These 1,500 new projects could save as much as 300 million tonnes of CO2 a year, or roughly the same as the United Kingdom’s annual emissions.
Backing up this spike in the number of new activities being registered is a significant growth in the number of new projects under development. Trove said that as many as 1,500 more projects are being prepared (in addition to the 1,500 registered in the last three years), with a potential further carbon saving of around 500 million tonnes of CO2 a year.
However, the current rate of investment in carbon credit projects is only one-third of the level needed to deliver the volume of credits required by 2030 under the agreed upon 1.5 degrees Celsius goal. The world needs a further $90 billion of capital to achieve the necessary volume of credits required under this scenario, according to Trove’s research.
“Trove’s research shows clearly that business understands both the importance of climate action, and the role that private sector engagement can play in scaling up our response to the climate challenge,” said Dirk Forrister, CEO of IETA.
“It is highly encouraging to see this rapidly growing investment into carbon projects which can deliver urgently needed climate action now. Verra stands ready to support this promising trend with its flagship Verified Carbon Standard Program to ensure that these projects issue high-quality carbon credits representing permanent and credible climate mitigation impact,” said Robin Rix, Chief of Legal, Policy, and Markets Officer with Verra.
“Now that investors have better tools to assess project quality and climate impact, they’re increasingly using them to invest in high-quality future carbon credit supply. An increase in future investment will help stop the issues with quality at the source and strengthen the market overall–and eventually lead the market to the robust market size many predict and that our climate emergency demands to drive investment toward real impact,” said Samuel Gill, president and co-founder of Sylvera.
The report can be found here.
ABOUT TROVE RESEARCH
Trove Research was founded on the principle that the climate challenge will only be solved through investment-grade data and analytics. True to these principles Trove has grown to over 90 staff in 3 years to become the leading source of data and intelligence on corporate climate commitments and the voluntary carbon market. Trove’s extensive services support hundreds of asset owners, funds managers, corporates, traders and project developers assess corporate decarbonisation efforts as well as opportunities and risks in investing in carbon reduction projects and the carbon credit market. See www.trove-research.com for more information. To contact the study author, email: email@example.com. T: +44 208 078 7199
Since 1999, IETA has been the leading voice of business on ambitious market-based climate change solutions and driving net zero. IETA advocates for trading systems for emissions reductions and removals that are environmentally robust, fair, open, efficient, accountable and consistent across national boundaries. Representing more than 300 leading international organisations, IETA is a trusted partner in developing international policies and market frameworks to reduce greenhouse gas emissions at the lowest cost while building a credible path to net zero emissions.
Verra is the nonprofit organisation that operates the Verified Carbon Standard (VCS) Program, as well as other standards in environmental and social markets. Verra is committed to helping reduce greenhouse gas emissions, improve livelihoods, and protect natural resources by working with the private and public sectors. We support climate action and sustainable development with standards, tools, and programs that credibly, transparently, and robustly assess environmental and social impacts and enable funding for sustaining and scaling up projects that verifiably deliver these benefits.
Sylvera is a leading carbon data provider. Our mission is to incentivize investment in real climate action. To help organisations ensure they’re making the most effective investments, Sylvera builds software that independently and accurately automates the evaluation of carbon projects that capture, remove, or avoid emissions. With Sylvera’s data and tools, businesses and governments can confidently invest in, benchmark, deliver, and report real climate impact. Co-founded in 2020 by Dr. Allister Furey and Sam Gill, the company is headquartered in London with additional offices in Belgrade and New York. To date, Sylvera has raised over $96 million from investors such as Balderton Capital, Index Ventures, Insight Partners, LocalGlobe, and Salesforce Ventures. Learn more at www.sylvera.com