Voluntary Carbon Market Demand to Hit 281M Credits Annually by 2025
The voluntary carbon market (VCM) is expanding as more companies seek to offset their greenhouse gas emissions. A new analysis by AlliedOffsets, a data and technology firm, predicts that demand for carbon credits will rise sharply in the coming years. Their findings suggest that new and returning buyers will require around 281 million credits annually, with spending reaching approximately $2.27 billion per year.
The VCM allows businesses to purchase carbon credits to balance out their emissions. Over the past five years, the market has grown considerably, with most buyers coming from technology, telecommunications, and energy industries. AlliedOffsets tracks this market, maintaining a database of over 36,000 projects, more than 28,000 buyers, and billions of tons of carbon credits issued or retired.
To forecast future demand, the firm uses a model called Likelihood to Buy (LtB). This model assesses factors such as a company's abatement potential, data centre usage, headquarters location, internal carbon pricing, net-zero targets, sector, and financial performance. According to the analysis, aviation, energy, and technology firms are expected to remain key buyers. The report also highlights strong interest from the healthcare sector. Around 556 healthcare companies were identified as potential new buyers, particularly in the United States, Germany, and Switzerland. Overall, the countries with the highest demand for carbon credits include the U.S., China, the UK, France, Germany, and Brazil. The growth of the VCM is being driven by stricter regulations, corporate climate pledges, and improved forecasting tools. AlliedOffsets suggests that these trends will push the market into a new phase of expansion.
The VCM is set to see increased activity, with companies across multiple sectors investing in carbon credits. Demand is projected to reach 281 million credits per year, with annual spending hitting $2.27 billion. The U.S., China, and several European nations are expected to lead this surge in demand.
