BeZero Carbon: Higher quality carbon credits are commanding greater price premiums, new research finds

Higher quality carbon credits are commanding greater price premiums, new research finds 

  • Research from carbon ratings agency BeZero Carbon finds that carbon credits which receive higher ratings are commanding greater price premiums across the voluntary carbon market (VCM).

  • Since April 2022, carbon credits in the three highest notches of the BeZero Carbon Rating scale commanded a price premium of around 80% above other lower rated credits.

  • The correlation between price and quality strengthened particularly in the last six months of 2023, indicating ratings are increasingly important in driving pricing across the VCM.  

16th January, 2024: Higher quality carbon credits are commanding greater price premiums across the voluntary carbon market, new research published by carbon ratings agency BeZero Carbon has revealed.

The BeZero Carbon Rating assesses the quality of carbon credits on an eight-point scale ranging from ‘highest likelihood’ to ‘lowest likelihood’ of achieving a tonne of CO₂e avoided or removed. To date, BeZero Carbon has published nearly 400 project ratings, equipping businesses with the knowledge, tools and confidence to make informed decisions about their environmental investments.

Analysis of pricing data from Xpansiv’s CBL exchange between April 2022 and December 2023, representing transactions of more than 50 million carbon credits, revealed that carbon credits rated A or above by BeZero commanded an average price premium of around 80% above lower rated credits. BeZero’s three highest ratings notches are AAA, AA and A.

More broadly, BeZero’s research found that on average, there has been a 25% price difference between credits separated by one notch on the BeZero Carbon Rating scale.

The correlation between price and quality has strengthened over the last 18 months, in particular through the second half of 2023 – indicating that ratings are an increasingly important factor driving the pricing of credits across the VCM.

Sebastien Cross, co-founder and Chief Innovation Officer at BeZero Carbon, said: “Independent carbon ratings are vital if the voluntary carbon market is to become more efficient and scale up. This research demonstrates that the market is maturing and moving towards a pricing structure that better reflects the underlying risk of individual carbon projects.  We are proud that our ratings are moving the market and are being used effectively by businesses to incorporate high-quality carbon credits into their net zero strategies, and hope to see these trends continue through into 2024.”

About BeZero Carbon

BeZero is the carbon ratings agency. Its ratings and risk products equip world-leading organisations with the knowledge, tools and confidence to make better climate decisions. Its aim is to scale investment in environmental markets that deliver a sustainable future.

Visit bezerocarbon.com and follow BeZero on LinkedIn and to learn more.