Scarcity Amongst Several High-Quality Carbon Projects and Its Impact on Pricing

In the voluntary carbon market, certain projects have established themselves as trusted, high-quality options, gaining strong traction in the secondary market and seeing significant retirement volumes. This trend is self-perpetuating—buyers feel more comfortable retiring credits from projects with high retirement rates, reinforcing demand and further depleting available supply, similar to a wildebeest crossing a river in migration: few want to be first, but once a critical mass has moved, others follow, driven by the reassurance of safety in numbers. This dynamic has been particularly evident in nature-based projects such as Katingan Peatland, Delta Blue Carbon, Sumatra Merang, and TIST, which have all seen increased demand and rising prices.

Independent rating agencies such as BeZero and Sylvera have been formative in shaping market confidence. Their assessments help buyers differentiate between projects based on factors like additionality, permanence, and co-benefits. Katingan was recently upgraded to an AA rating, reinforcing its status as a top-tier project and driving demand even higher. With supply tightening, prices for Katingan credits have surged across multiple vintages. Similarly, Delta Blue Carbon—though rated BBB—has seen increased demand due to its unique status as one of the few large-scale blue carbon projects available. Given the scarcity of blue carbon credits, prices have risen sharply, and secondary market activity remains strong.

Beyond these two well-known projects, other high-quality credits are also becoming increasingly scarce. Sumatra Merang, an A-rated project, has been widely retired, making it almost impossible to source in the market. Likewise, TIST projects, which range in ratings from BBB to A, have gained a strong reputation for their integrity and impact, contributing to their growing scarcity and comparatively high pricing.

Despite the current supply crunch, the market may see some relief in the near future. Both Katingan and Delta Blue Carbon are expected to issue new volumes this year, injecting fresh supply into the market. The impact of these issuances remains uncertain; while increased availability could help stabilize prices, continued strong demand for high-integrity credits may keep them elevated.

The voluntary carbon market is evolving rapidly, with buyers placing greater emphasis on credibility, ratings, and retirement trends. As supply constraints continue to shape pricing dynamics, market participants will need to navigate these shifts carefully. Whether new issuances will balance the current shortage or further fuel demand remains to be seen, but one thing is clear—high-quality carbon projects are becoming increasingly valuable commodities in a market hungry for integrity.