Carbon markets around the world are set to continue growing rapidly as countries double down on climate ambition, and as corporates continue to pursue net-zero goals, IETA’s latest annual Market Sentiment Survey finds.
The growth is expected to extend to the Voluntary Carbon Market, where efforts are underway to scale up supply of offsets to meet growing global demand, according to the survey, carried out by PwC UK’s Sustainability and Climate Change team.
Prices in the EU Emissions Trading System (ETS) have more than doubled since the beginning of March 2021, when Europe was beginning to emerge from the shadow of coronavirus. Prices in other carbon markets have also risen, though by smaller increments.
The conflict in Ukraine and the resulting concerns over energy security are likely to lead Europe to adopt more ambitious climate targets. Around half those surveyed this year said they expect Europe to strengthen its “Fit for 55” climate package and this, along with measures to cut Russian imports of fossil fuels and speed up the deployment of renewables, is expected to drive EU carbon prices to an average price of almost €100 in the period 2026-30.
Most respondents to the survey believe that the agreement reached at the climate talks in Glasgow last year is insufficient to achieve the global goal of net zero emissions by the middle of the century. 52% of survey respondents also say there has not been enough progress in translating commitments into action since COP26.
On voluntary markets, nearly three-quarters of respondents – up from two-thirds in 2021 – expect the market to partition between credits for carbon avoidance or reduction on one side, and carbon removals on the other by 2030. Most of those polled plan to use nature-based offsets in their market growth strategy.