The Institute of International Finance’s CEO believes voluntary carbon credits have great upside potential and projects the market may be worth up to $100 billion per year by 2050.

Governments and corporate leaders are under increasing pressure to deliver on pledges made as part of the historic Paris Agreement in advance of this year’s COP26, which will be hosted in Scotland, in early November.

The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) released the second phase of its roadmap for developing a large-scale and transparent carbon credit trading market recently.

According to the TSVCM, it will enable more companies to put their net-zero promises into action by investing in emissions-reduction projects, where they believe it would have the greatest impact.

The private-sector-led project, established last year by former Bank of England governor Mark Carney, believes a broad-based carbon market is “essential” to limiting global temperature rise to 1.5 degrees Celsius above pre-industrial levels – the global aim outlined in the Paris Agreement.

Carbon credits are permits that allow a corporation to emit a specified quantity of greenhouse emissions. They are intended to provide a financial incentive for high-polluting businesses to reduce their pollution.

The voluntary carbon offset market is distinct from cap-and-trade programs such as Europe’s flagship Emissions Trading System (ETS), which has a finite carbon budget and allows emitters to sell allowances.

Companies in the voluntary market, on the other hand, are more likely to be attempting to reach internal targets to decrease their carbon footprint.

The TSVCM had previously stated that in order to fulfil the Paris climate objectives, the voluntary carbon market would need to increase 15-fold and might be valued up to $50 Billion by the end of the decade.