Can the integrity of the voluntary carbon market be saved?

By Imogen O'Rorke and Marta Seitz 

The carbon credits market has seen a spectacular fall from grace in recent times – fuelled by a regular drumbeat of offsetting greenwash stories  (most recently the news that Shell acquired ‘sham credits’ in dubious  programmes in China).  The transaction value in the voluntary carbon market fell from $2.1bn in 2021 to $723mn in 2023, according to Ecosystem Marketplace and the MSCI showed that volumes and prices remained depressed last year. 

And yet… recent positive developments in the Asian markets suggest that this market is far from busted. Last month a $32M funding round was announced by London-based carbon credit rating agency BeZero Carbon. The lead investor is GenZero, launched in 2022 with $3.6bn of committed capital from Temasek, Singapore’s $288bn sovereign wealth fund. Then this week, there was an encouraging report that the average price of Thailand Voluntary Emission Reduction Programme (T-VER) in the last quarter of 2024 saw a 40% rise from the previous quarter. 

The fact is the world needs carbon removals – and high integrity carbon credits –  at scale to get to net zero. The Intergovernmental Panel on Climate Change says at least 100bn tonnes of carbon dioxide must be removed from the atmosphere this century if the world is to have a chance of limiting global warming to target levels. Many analysts maintain the journey towards net zero will be impossible without effective carbon markets.  

Driving demand forward. 

The path ahead for carbon markets and climate action remains challenging, but not insurmountable. While policy shifts like the U.S. withdrawal from the Paris Agreement create uncertainty, history has shown that market resilience and private-sector innovation can drive progress. Strengthening carbon credit quality, expanding regulatory frameworks, and integrating them into international pricing mechanisms all offer viable solutions for maintaining momentum.  

COP29’s basic agreement on what credits could be used in the long-awaited international carbon trading mechanism offers a preliminary framework. Similarly, the adoption of carbon credits in mandatory pricing schemes - such as within the regulation of the airline industry requiring international airlines to offset emissions with credits by 2027 – offers another driver of adoption. A paper from Harvard academics further suggests the use of EU frameworks to allow the use of carbon credits to reduce levies on imports under a new carbon border tax regime, driving investment in carbon projects. 

Ultimately, new challenges and harder scrutiny do not signal the beginning of the end, but rather a challenging push forward for new and innovative ways to continue forward.  

As governments, businesses, and global institutions adapt, this moment should be seen not as a setback, but as an opportunity to refine and reinforce the mechanisms that will ultimately shape a more sustainable future.