Carbon retirement in 2022

carbon retirement alliedoffset

Carbon retirement is the process of permanently removing a carbon offset from the carbon market. An entity that has purchased the offset, such as a company or government, carries out this process to compensate for their own carbon emissions. Once a carbon offset is retired, it can no longer be traded or sold.

Main Movements of Carbon Retirement in 2022:

  • 205m tCO2e were retired in 2022 (compared to 208m tCO2e in 2021).
  • The aggregated value of retired credits reached $1.35 billion.
  • 80% of retired offsets were from just two sectors – forestry and RES
  • December consistently saw the highest retirement numbers in both 2021 and 2022.

Reasons for the Decrease in Carbon Retirement:

  • Global recession.
  • Slower tokenization rates.
  • Challenges in the forestry sector (with retirements from a key Indonesian supplier decreasing by 51%, high prices for forest offsets compared to those from Renewable Energy Sources (RES), and an increased role of sovereign carbon offsets).

Top 10 Countries Retiring 75% of the Global Volume:

  • India: 48.8m
  • China: 28.7m
  • Colombia: 15.6m
  • Brazil: 15.2m
  • USA: 12.2m
  • Turkey: 10.2m
  • Indonesia: 8.9m
  • South Korea: 7.6m
  • Peru: 6.3m
  • Zimbabwe: 4.8m

The preference for carbon retirement is given to offsets issued since 2017. However, the market still circulates offsets from the following vintages:

  • 1996-2012: 103m tCO2
  • 2012-2016: 270m tCO2
  • 2017-2022: 540m tCO2

57% of the retired offsets were registered with the Verified Carbon Standard Program.

Climate projects from 2015-2020 only issued 68% of the offsets initially planned in their project development documentation.

The market is currently oversupplied. At the existing demand rate, the offsets would suffice for 4.5 years.

List of Companies by Volume of Retired offsets:

top 10 retiring entities responsible for nearly 60% of retirements in the last 3 years

AlliedOffsets VCM Retirement Analysis and 2023 Forecast provides insights into trends in the voluntary carbon market (VCM). The PDF discusses carbon retirement trends, market growth, the emergence of new projects, the increasing focus on quality, the development of new markets, and the use of VCM to finance climate change mitigation projects.

AlliedOffsets is a data and analytics provider focusing on the voluntary carbon market (VCM). The company’s database aggregates data from a variety of sources, including registries, projects, and buyers.

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