A new UN-sanctioned carbon credit system, the Paris Agreement Crediting Mechanism (PACM), could expand the global carbon credit market to eight times its current size, potentially generating $12 billion in value annually by 2030, according to Guy Turner, MSCI’s head of carbon markets. Turner shared these insights during a recent webinar hosted by the carbon exchange Xpansiv, highlighting the potential impact of the upcoming COP29 endorsement.
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Currently, the voluntary carbon market (VCM) is valued at around $1.5 billion, but the PACM could significantly surpass this. Introduced under Article 6.4 of the Paris Agreement, PACM aims to streamline international carbon crediting, with rules expected to be finalised in the upcoming COP talks in Baku this November.
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Turner emphasised that many countries are likely to fall short of their 2030 environmental goals and will need to rely on PACM credits to bridge the gap. Unlike VCM credits, PACM credits will be eligible to help nations meet their commitments under the Paris Agreement. This anticipated demand could drive PACM credit prices toward $40 per tonne, much higher than typical VCM prices, which often fall between $2 to $10.
To ensure credibility, PACM credits will include ‘corresponding adjustments’ (CAs) to prevent double counting of emissions reductions, a move supported by host countries. Turner also noted that demand for PACM credits is expected to extend beyond governments, with corporate entities and airlines vying for these high-quality offsets, potentially pushing the market value even higher through international aviation contributions under CORSIA.
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