Scaling High-Quality Voluntary Carbon Credits: Price and Strategy

Dear friends from the manufacturing sector,

As we all push towards net-zero, there’s a lot of discussion around voluntary carbon credits—especially the high-quality ones that promise to remove a ton of carbon with serious credibility. But here’s the challenge: they’re often priced steeply, sometimes at $900 or more per ton. And that raises the question for many of us: are these high prices temporary, or is this the reality we need to accept?

The Challenge

High-quality credits, such as those generated through direct air capture (DAC), do an exceptional job of removing carbon. Yet, with some credits priced as high as $1,200 per ton, they stand in stark contrast to more affordable options like nature-based credits, which can range from $10 to $30 per ton. This price gap often leads to a dilemma: is the premium worth paying, and how do we compare the value of such credits? And for the manufacturers of high impact solutions, where should they focus their efforts to build scale, reduce costs, and charge a premium until there?

Beyond price, it’s crucial to ask if the money we spend on offsets really leads to the intended carbon reductions. Verification is key here.

Rethinking the Approach: New Ideas for an Old Problem

To make high-quality credits work for us, we need to go beyond the standard thinking. The strategies that have worked in tech might not apply as easily to the manufacturers of expensive carbon removal technologies. Here are a few avenues to explore:

1. Targeting sectors with high marginal abatement costs: As part of a broader #CarbonMarkets strategy, consider targeting heavy manufacturing, energy, and cement, as these industries face major challenges in decarbonization. For these sectors, high-quality credits aren’t just a luxury—they are critical to meeting their final, and often most expensive, emissions reductions.

2. Tap into Compliance Markets: Governments play a vital role in determining the success of carbon credits. As more countries implement stricter carbon pricing policies, like those highlighted on the World Bank's Carbon Pricing Dashboard, the demand for verified, high-integrity credits will increase. Article 6 compliance credits could drive structured, long-term demand, integrating voluntary credits into national decarbonization strategies.

3. Partner Up in Developing Countries: In regions like Africa, e.g. Namibia or Kenya, or Latin America, there are significant opportunities to align high-quality credits with local development goals. Joint ventures can help generate credits that not only reduce emissions but also bring social and economic benefits. These projects may not always offer the cheapest credits, but they present a strong value proposition for companies looking to make a deeper impact.

Some Questions to Consider

To guide our thinking, here are a few specific questions that could steer future decisions on carbon credit:

Here’s the paragraph with a 40% reduction in word count:

• Who needs these credits most? Are they crucial for sectors with hard-to-abate emissions, or do companies with aggressive sustainability targets also represent a key market?
• How do we communicate value beyond price? What makes these credits worth the premium—stability, additionality, or rigorous verification?
• Are these prices sustainable? Will market volumes rise enough to lower costs, or will these remain niche premium projects?
• Can we work with governments to boost credibility? How can our credits be recognized under frameworks like Article 6 to access compliance markets?
• What role does verification play in reducing risk? Verified credits with strict additionality ensure genuine reductions, not projects that would have occurred anyway.

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Moving Forward

High-quality carbon credits can accelerate the path to net-zero, but we must use them wisely. By asking the right questions and exploring new markets, we can turn challenges into opportunities. The key issue is whether scaling will lower costs or keep these credits as a premium option. Let’s keep pushing for meaningful change, and I look forward to your thoughts on tackling this together.

Let me know if this works for you! Olivier Dallemagne CEO, Resilient Growth Consultants