EM – State of the Blue Carbon Market, 2024

Coastal and marine ecosystems known as Blue Carbon (BC) habitats play a critical role in sequestering carbon and mitigating climate change. However, these vital habitats are at risk of degradation and loss of ecosystem services due to conversion. The potential of these ecosystems in climate mitigation is not fully realized, and there is a need for increased investment in conservation and restoration. The report provides an overview of blue carbon, its potential for climate mitigation, and the challenges faced in project development. It discusses the demand and supply of BC credits and sources of finance. Key findings reveal that BC projects are currently small-scale and cannot meet the demand from investors. Challenges include ecological considerations, monitoring difficulties, and policy differences compared to terrestrial ecosystems. The state of the market for BC credits is described as niche, with most transactions coming from tropical countries at premium prices. Demand for BC credits is driven by corporate and government interests in climate accounting and marine conservation. However, supply is constrained by high costs and verification challenges. Recommendations are provided to scale up BC finance and project delivery to unlock the full potential of these ecosystems in climate mitigation.