Supply-side ecosystem and pricing analysis: Voluntary carbon offset market

The voluntary carbon offset market ecosystem is a complex network of entities and mechanisms designed to address the issue of carbon emissions and their impact on climate change. The goal of this ecosystem is to facilitate the reduction of greenhouse gas emissions by promoting projects and activities that help offset carbon emissions.

A global energy and petrochemical company with a presence in over 90 countries entrusted us with the objective of developing a comprehensive understanding of the supply side of the voluntary carbon offset (VCO) market. Take a deep dive into their story and how they were able to achieve a detailed analysis of the carbon offset value chain.

Objective and challenges

The carbon offset market has many players in the ecosystem. Offsets delivered to the retail market come from different routes, with different markups. Amid such a market scenario lack of transparency regarding source pricing creates an environment of uncertainty.

The research firm approached Netscribes to:

• Develop a comprehensive understanding of the supply side of the voluntary carbon offset (VCO) market.
• This included its ecosystem and prevalent pricing practices.

Approach and solution

To provide a detailed view of the voluntary carbon offset (VCO) market our team undertook –

Secondary research:

• Carefully examining reference materials and resources provided by the client
• A thorough desk research, utilizing a wide range of reputable sources and industry reports to gather relevant information and insights

Primary research:

We conducted interviews with four key stakeholders from the client end to:

• Gain a deeper understanding of their position
• Build initial market hypothesis

We also conducted expert interviews with:

• Four industry experts
• Forty-one market participants

Pricing database and exchange:

Netscribes team of researchers gathered pricing information from various sources like:

• CTX marketplace
• OPIS
• Pachama
• Climate Trade
• CBL Markets

Results delivered

We provided the client with a detailed analysis of the carbon offset value chain which helped them in understanding:

Price range by project types: Among the five categories of carbon sequestration projects (Afforestation, REDD/REDD+, IFM, Soil Carbon, and Blue Carbon), and the range of pricing that is seen in the market at present
Supply-side drivers: The future pricing expected to evolve in each category and the potential drivers on the supply side to be assessed
Factors influencing pricing: What are the key drivers for pricing and the extent of variability in pricing? What factors influence prices and to what extent?

Related reading: Sustainable IT: reducing carbon footprints and preserving resources