Investment Trends and Outcomes in the Global Carbon-Credit Market

This report originally appeared on trove-research.com. MSCI acquired Trove Research — now known as MSCI Carbon Markets — in November 2023.

Between 2012 and 2022, investment into carbon-credit projects totaled USD 36 billion, with half of this occurring in the last three years and more than USD 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 decarbonization efforts. Over 80% of the USD 18 billion raised in the last two and a half years is targeted at nature-based projects such as afforestation/reforestation, improved forest management and reducing emissions from deforestation and forest degradation.

Our analysis found that since 2020, more than 1,500 new carbon-credit projects have been developed and registered with the five leading carbon registries, with a potential to save as much as 300 million tonnes of CO2 a year, or roughly the same as the U.K.’s annual emissions. As many as 1,500 more projects are under development, 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°C goal.