A recent report by UK-based Trove Research has shown that while there has been substantial investment in carbon credit projects in recent years, global efforts are falling significantly short of reaching the 2030 emissions reduction target and there is an urgent need for an additional $90 billion in funding to bridge this gap.
According to the Global Carbon Credit Investment Report, published Thursday, a total $36 billion was allocated to carbon credit projects in the period 2012-2022, and another $3 billion has already been earmarked for future investments.
This surge promises over a thousand new carbon reduction projects, spanning from forest protection to innovative carbon capture and storage solutions, providing a much-needed supply of carbon credits for corporate decarbonization efforts, Trove Research said in its report.
In the last 2.5 years alone, over $18 billion was raised for carbon credit funds, and more than 80% was allocated to nature-based projects like afforestation, reforestation, and efforts to reduce emissions from deforestation and forest degradation.
The report also reveals that since 2020, another 1,500 new carbon credit projects have been registered with the five leading carbon registries—a 160% increase compared to 2012-2020.
These projects could potentially reduce up to 300 million tons of carbon dioxide (CO2) annually, equivalent to the UK’s annual emissions.
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Despite these positive developments, current investment levels in carbon credit projects are insufficient, amounting to only one-third of the required funding to meet the 2030 emissions target as per the 1.5 degrees Celsius goal.
The research findings underscore the urgent need for an additional $90 billion in capital to achieve the necessary volume of credits outlined in this critical scenario.
Trove Research is a leading company in providing data and intelligence on corporate climate commitments and the voluntary carbon market.
Read more: Trove Research To Host Quarterly Webinar On The Voluntary Carbon Market On July 20th
