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Scaling Today's Carbon Markets: A New Market Blueprint for 2024

Voluntary carbon markets (VCMs) have become a force across the globe. But a new report from Nasdaq and The ValueExchange finds that today’s structural challenges imperil tomorrow’s growth.

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The Growth Challenge

Carbon credits are in demand from an increasingly diverse audience, fostering an emerging market ecosystem of corporate buyers, fund managers, financers, registries, operators and carbon project owners.

Yet while demand for credits grows, so too do fundamental challenges that obscure, fragment and complicate VCMs.

Key Findings

Who Participated?

The core takeaway from our survey is that respondents expect growth and are largely eager to participate in carbon markets, but problems linked to price transparency, market inefficiencies and manual diligence restrict their ideal trading and issuance flows.
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Scaling Carbon Markets: A New Market Blueprint

We surveyed 130+ strategic decision makers on how they're integrating carbon markets into their strategy.

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Diverse Priorities Drive Diverse Demand

67%

Stakeholder Demand: Corporate respondents ranked stakeholder ESG demands as their No. 1 driver for buying and trading credits.

44%

Investment Returns: Financial investors including fund managers said returns were their top driver of activity.

38%

Decarbonization: Commercial banks ranked decarbonization of investment portfolios at the top.

30%

New Business: Intermediaries including brokers and custodians were most driven by the opportunity for a new revenue stream.

Three Main Challenges: Price Transparency, Market Efficiency, Fragmentation
We need to turn voluntary carbon credit pricing from an art form into a science.
Head of Commercial Banking, Tier 1 Global Bank
The challenges in the voluntary carbon markets today are about market structure, not our own operating models.

 
Head of Sustainability, Leading Corporate
Market fragmentation is leaving us with a growing number of liquidity puddles.

 
Head of Carbon Trading, European Broker

Manual Processes: Time and Resource Drag

Share of activities managed by phone and email:
63% Project Listing
33% Trade Execution
31% Monitoring, Reporting and Verification
19% Clearing Settlement and Funding
Podcast

#vxInsight podcast: Scaling the Carbon Markets

For more insights on the carbon markets, listen to this podcast featuring Nasdaq's Roland Chai, Head of European Markets Services, and ValueExchange CEO & Founder Barnaby Nelson.  
Listen Now
Seeking Standardization Standardization in products and contracts is essential to a scalable market, but it’s one thing VCMs generally struggle with. And it’s holding growth back: 25% of financial investors said a lack of standard product definitions limited their ideal flows by 51 – 100%. The gap in standards not only creates blockages in demand but also supply, 29% of project owners reported similar levels of constricted flows due to lack of standards in spot reference contracts. Ultimately, these negative impacts erode trust and transparency, while also creating risks and preventing local markets from attracting foreign investors.

Tomorrow's Headlines

Registries at the Heart of the Solution

66% of respondents said registries will be critical enablers of any progress on current challenges as the market looks to them for dependability, consistency, and standardization.

Will Engineered Removal Credits Gain More Share?

While 55% of activity was attributable to traditional credits (e.g., forestry and renewable energy), credits tied to projects that remove and store carbon command a price premium, trading at $350 per CO2e ton for their permanence and lower risks.

Hopes are High

97% of respondents are confident that results will be seen in three years and said investor education will be crucial to any progress.

Resource Library

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Learn more about Nasdaq’s technology custom built for carbon markets and registries.

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Case Study

Use Case for Carbon Credit Trading

As carbon markets gain popularity, a marketplace model can create standardization and reduce fragmentation. Learn how Nasdaq's tailored technology can support carbon trading venues.

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Infographic

Scaling Carbon Markets: Solving the Growth Challenge

Nasdaq and VX partnered to learn more about the state of VCMs and what decision makers view as the biggest growth areas. We’ve curated and illustrated key insights on opportunities, challenges and more.

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Webinar

Scaling Carbon Markets Webinar: Breaking Down the New Market Blueprint for 2024

Watch the recording from our latest webinar where we discussed the survey results, the challenges preventing growth in carbon markets, opportunities for change, and an action plan for corporates, exchanges and market participants.

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Articles, Press Releases, Factsheets and More
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Choose Nasdaq Marketplace Services Platform

End-to-end capabilities across the carbon credit trade lifecycle deployed via our SaaS, cloud-based platform tailored for carbon venues. Benefit from automation and standardization from issuance through trading, settlement and custody. We’re helping leading registries and market operators like Puro.earth and CIX to build trust offer efficiency and drive growth that leads to positive climate impacts.

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Discover Puro.earth, providing carbon removal as a service to corporations looking to neutralize carbon emissions by identifying processes that remove carbon dioxide from the atmosphere.

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