State of the VCM quality update: Continued slow improvement

Earlier this year we published a report on the State of Quality of the Voluntary Carbon Market that provided data up to the first quarter of 2024. The key takeaway was that it appeared the quality of the voluntary carbon market was improving – particularly as we saw a reduction of issuances (a leading indicator) with our lowest rating (i.e., an “E” in the Calyx Global ratings system, which grades from A to E). We are providing an update to that report, in particular, whether there is still a trend toward a higher quality VCM. 

This latest look demonstrates the overall improvement in issuances is still holding – 2024 year-to-date data continues to show a drop in issuances of the poorest-rated credits. However, the year-to-date drop is not as strong as it was in Q1. In the first quarter, the issuance of E-rated credits dropped by 50%. As of today, issuances of E-rated credits have dropped by 36% compared to 2023.

What changed after Q1? It appears there has been a shift away from REDD and toward issuances of renewable energy credits. This could be because the media has not paid much attention to these credits – and has rather focused on REDD. Below can see that issuances of REDD have declined sharply, replaced mostly by renewable energy, which also tends to occupy the lower ranges of our ratings.

Given the ICVCM’s recent announcement that it rejected most renewable energy methodologies, the question is whether we will see any changes in the final months of 2024. Read how our analysis of renewable energy aligns with the ICVCM decision here.

We will continue to provide updates on whether the VCM is moving to higher quality in the coming months. 

To check out the full report with data through Q1 2024, download it here.