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Citigroup & Voluntary Carbon Market: A Critical Piece of the Net Zero Puzzle

This is the title of a 40-pages report published last July 10 by Citigroup, Institutional Clients Group.


"There is currently a $1.7 trillion investment gap in climate mitigation that needs to be closed to limit the negative impact of climate change on both people and the planet. As the public sector does not have the fiscal capacity to reach this investment figure alone, 70% of all climate finance needed must come from the private sector. For these reasons, we must deploy all available financial tools, while at the same time develop new, innovative financial tools that can be scaled up rapidly. Remember, we are in a race against time ..."


Citigroup considers the voluntary carbon market (VCM) "nascent", but recognizes that VCM has already managed to provide financing for many sustainable projects in developing and emerging countries. "The VCM is currently valued at approximately $2 billion, but many project it will scale up significantly over the next decade as more companies invest in voluntary carbon credits to reduce their residual emissions".


According to their report, the VCM market can reach up tp $50 billion by 2030. In other words, a 25x growth in just 7 years !


But they - rightfully - add "We cannot deny the market currently has some problems. These include transparency in the pricing of credits, confusion among buyers as to how the market works, and confusion on ensuring that what they are investing in actually reduces, avoids, or removes carbon emissions".


Because of all that, Citigroup prepared this guide for companies, discussing how the market works, describing what initiatives are being done to improve it, and elaborating on six steps to help companies use carbon credits effectively:

  1. develop a strategy

  2. find a trusted seller

  3. ask the right questions

  4. use verified carbon credits

  5. diversify portfolios

  6. use a rating agency, if necessary


There is also a chapter titled "New Players" discussing new marketplaces, agriculture (Agriculture Carbon Credits !), rating agencies, blockchain and financial institutions, that "are increasing their capabilities of selling and buying voluntary carbon market credits ...".


Click at the image below to access and download the guide.




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 CARBON CREDIT MARKETS

“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”

“I am among those who think that science has great beauty”

Madame Marie Curie (1867 - 1934) Chemist & physicist. French, born Polish.

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