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Xpansiv recently released its annual carbon market review for 2022. The report highlights key trends and insights in the voluntary carbon market (VCM) in 2022. Despite the challenges faced by the VCM, it continued to grow, with a focus on quality and verifiability in carbon credits.
The VCM faced a tough year in 2022 due to macroeconomic conditions and the Russian invasion of Ukraine. However, the market continued to grow, with credits traded on CBL increasing by 44% to over $795 million.
The number of firms transacting in CBL's spot market increased to almost 200, up 32% from 2021. The derivatives markets also grew, with CBL GEO futures contracts traded by CME Group exceeding 209 million credits.
Standardised spot-market contracts saw significant growth in 2022, with volume traded through spot GEO contracts on CBL increasing by 97% from 2021 levels, up to 32.3 million tonnes. Among the standardised contracts, the N-GEO emerged as the most prominent VCM benchmark.
A new trend emerged in the VCM in 2022 called basis trading. Basis trading involves pricing project-specific credits with additional attributes compared to standardised contracts like N-GEO. Basis trading provides market participants with price transparency and expanded flexibility in project-specific credit transactions.
There was also an increasing demand for high-quality credits in the VCM in 2022. Market participants seeked credits with higher integrity and verifiability due to public attention towards credit integrity. This resulted in the launch of the Sustainable Development Global Emissions Offset (SD-GEO) contract.
Nature-based credits became the most popular type of credit trading in 2022, surpassing energy industry credits. The nature-based market share reached 48% of volume, with value traded exceeding $309 million, up 72% from 2021. The African segment of the market saw significant growth in 2022, jumping to 8% of the market by volume with over $63.6 million in value traded.
The Xpansiv annual carbon market review for 2022 highlights the major trends and insights in the VCM. Despite the challenges faced by the VCM, it continued to grow, with a focus on quality and verifiability in carbon credits. The report also provides insights into emerging trends and new developments in the VCM.
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