Global carbon credit investment report

A major new study by Trove Research finds that investment into carbon credit projects between 2012 and 2022 totalled $36bn, with half of this occurring in the last three years and more than $3bn 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 decarbonisation efforts.

More than $18bn of investment capital has been raised to invest in carbon credit funds in the last two and a half years alone. Over 80% of this funding is targeted in nature-based projects such as afforestation/reforestation, improved forest management and reducing emissions from deforestation and forest degradation. A total of 246 nature-based projects currently cover a total area of 30 million hectares, roughly the same as Italy’s landmass.

The analysis found that since 2020 more than 1,500 new carbon credit projects have been developed and registered with the five leading carbon registries. This represents an increase of about 160% in the rate of registration compared to the 2012-2020 period. These 1,500 new projects could save as much as 300 million tonnes of CO₂ a year, or roughly the same as the United Kingdom’s annual emissions.

Backing up this spike in the number of new activities being registered is a significant growth in the number of new projects under development. As many as 1,500 more projects are being prepared (in addition to the 1,500 registered in the last 3 years), 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 degrees Celsius goal. The world needs a further $90 billion of capital to achieve the necessary volume of credits required under this scenario, according to Trove’s research.