According to a study conducted by Trove Research and UCL, carbon credit prices may experience a significant surge, potentially reaching US$50 per tonne by 2030. This surge is expected to be driven by corporate demand for achieving net zero targets. The current average prices of US$3-5 per tonne are regarded as “unsustainably low” due to a historical oversupply of credits. The researchers also speculate that by 2050, prices could escalate further to around US$100 per tonne. Higher prices would act as a strong incentive for landowners to redirect their investments from agriculture towards preserving and expanding forestry.
The study highlights the risks associated with low carbon credit prices, including the disincentivising of climate change investments and the potential for accusations of “greenwashing” by companies. Greenwashing refers to the practice of claiming credit for decarbonization efforts that would have been undertaken regardless. To address these concerns, the report’s authors emphasize the need for a thorough “clean up” and independent regulation of the carbon credit market.
As corporate commitments to achieving net zero continue to rise, the study underscores the importance of establishing a robust and transparent carbon credit market. By aligning prices with the true value of emissions reductions, the market can effectively incentivize sustainable practices and provide a credible mechanism for organizations to demonstrate their genuine efforts in combating climate change.
