Carbon Credit Buyer Preferences Are Rapidly Shifting
- Media Manager
- Feb 7, 2024
- 1 min read
Updated: Feb 28, 2024
Forbes
Written By: Mark Le Dain
Published: February 7th, 2024
Photo Credit: Unsplash/CC0 Public Domain
Price discovery and buyer preferences are signs of increased liquidity and mature markets. These elements are now present in the carbon credit markets. Within the nature-based solutions (“NBS”) space, there is an increasing preference for afforestation, reforestation, and revegetation (“ARR”) vs reducing emissions from deforestation and forest degradation (“REDD”). Meanwhile, large tech companies are showing a preference for carbon dioxide removal (“CDR”) technologies, with both direct air capture (”DAC”) and bioenergy with CCS (“BECCS”) remaining highly coveted. Within each category, a preference is developing for modular solutions to reduce execution risk further, giving buyers higher certainty that the projects will achieve their stated net-zero targets on time. Increased buyer preferences are helpful, as it makes it more likely the projects developed will have active offset buyers once completed, aligning incentives.
Specific nature-based solutions have recently come under fire, primarily those protecting existing forests. Lack of verification, exaggerated claims by certain participants, and an inability to halt broader deforestation pressures, leading to substitution, have been some of the problems. This is upsetting and probably most troubling for the names doing reliable work in the NBS space, as many don’t deserve this brush.
