Carbon Credit Buyer Preferences Are Rapidly Shifting
“we don’t see a shift away from NBS, but rather a diversification... into Technology-Based Solutions due to affinity of big tech firms for technology, making them more willing and interested to invest in novel technologies such as DACs, BECCS, CCUS.”
The carbon credit market is potentially the most important market globally because it is required to incentivize the projects that will allow us, collectively, to meet emissions targets. There has recently been a lot of news around some credits dropping in price, while others climbed, with descriptions of the market as uncertain. While it is early stage, price discovery and buyer preferences are actually signs of increased liquidity and maturing markets. These elements are now present in the carbon credit markets, which should accelerate the projects that depend on them.
In the credit market there is a breakdown between nature-based solutions (“NBS”), and traditional carbon credits. Based on what is happening with the carbon the credits can be further broken down into reduction, removal, or avoidance. Removal is obviously the most certain in having an impact, but due to the complexity of those projects the volume of removal credits is not yet large. Buyers are starting to forecast their budgets based on these categories and the type of solution, and these trends are important for participants.
Within the NBS space, there is an increasing preference for afforestation,( article continues at Forbes )