Investment trends in carbon credits research

Sylvera is proud to sponsor Trove Research’s new report into investment trends in carbon credit markets, which is the first-ever analysis of capital flows in the voluntary carbon market. (Full report here.) 

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. While the voluntary carbon markets have experienced explosive growth in the past few years, the current supply of high-quality carbon credits is not sufficient to meet our global net zero goals. Part of this report examines investment into early-stage projects, an effort to shore up the supply of high-quality credits in the future, giving buyers and investors more confidence in their actual climate impact. Sylvera refers to these as pre-issuance projects and has identified pre-issuance investing as a growing trend among proactive buyers. 

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The report is based on an analysis of surveys completed by market participants, open-sourced data around capital raises, and investment modeling conducted by the Trove Research team.

Key takeaways 

• Investment in carbon credit projects between 2012 and 2022 totals $36 billion. 
• More than 80% of this funding is targeted at nature-based projects such as afforestation/reforestation, improved forest management, and reducing emissions from deforestation and forest degradation. 
• One-third of these financial commitments ($5.2bn since 2021) have been made by global corporations – including some 40-50 of the world’s largest companies – investing alongside project developers to secure long-term access to carbon credits. 
• Since 2020 more than 1,500 new carbon credit projects have been developed and registered with the five leading carbon registries. 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.
• 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 1.5 degree Celsius goal.

To learn more about how Sylvera can help you navigate investment into issuing and pre-issuance carbon projects, book a demo.

Methodology

The analysis looks at both capital raised/committed at the fund level, and capital invested directly in carbon credit projects.

The analysis focuses on investments made between 2012 and 2020, and 2020 to 2023.

Data has been obtained from three main sources: (i) a survey of market participants conducted during April and May 2023, (ii) analysis of over 400 public announcements of capital raises for low carbon funds, and (iii) modelled investment for over 7,000 projects, both registered and on the development pipeline.