Document Title Publication Date PDF PPT Price Scenarios to 2050: Nov-22 28 November 2022 
- This dashboard presents Trove Research’s long term price scenarios for global carbon credit market to 2050.
- Trove's model builds on three supporting models: the long-term fundamental model for Carbon Credit Supply (June 2021), the carbon credit demand forecast model and carbon credit supply forecast model.
- The price curves are presented as “scenarios” rather than forecasts. The scenarios present collective assumptions about the many (uncertain) factors that could affect the supply and demand for carbon credits.
- Scenario analysis: Two scenarios are presented for carbon credit demand and two for supply, effectively representing drivers that will act to increase or decrease credit prices. Demand scenarios are generated from Trove Research modelling of future credit demand from net zero commitments (SBTi aligned and non-SBTi aligned), CORSIA, and a wide range of companies with carbon neutral claims. Supply scenarios reflect the stringency of governance systems affecting how carbon credits are generated, as well as the fundamentals of project availability and project cost.
- Reduction vs. removals modelling: Trove modelling separates the markets for removal and reduction credits. Reduction credits reduce green house gases released into the atmosphere. These are sometimes referred to as avoidance credits. Project types include renewable energy, energy efficiency, REDD+ and carbon capture (CCS). They account for most of the credits issued to date. Removal credits are from projects that remove greenhouse gases from the atmosphere. The most common project types involve growing new vegetation such as forest restoration, but emerging technologies such as direct air capture, biochar and bioenergy with CCS are also being explored. Removal credits are required under the SBTi net zero standard to neutralise residual emissions once all feasible mitigation has been undertaken.
- Willingness to pay considerations: The purchase of carbon credits by the corporate sector is mostly undertaken to improve reputation and show leadership on climate related issues. CORSIA will function more like a compliance market, but corporates do not have infinite budgets with which to purchase carbon credits. Our modelling explicitly takes these budget constraints into account through assumptions on the maximum willingness to pay for carbon credits in different industry sectors.
- Surpluses: A unique feature of the voluntary carbon market is that the supply of carbon credits continues irrespective of the level of demand. The Trove model takes into account the build-up of historic and future surplus credits. This surplus is assumed to be drawn down over future years adding, especially in the low-quality supply scenario.
- Weighted average credit prices: assume three reduction credits are acquired for each removal credit.
- Please refer to our latest quarterly report and module Data and Methodology Note for more details.
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