The building blocks for a high-integrity voluntary carbon market are in place. Credit – Getty Images—© Andriy Onufriyenko
As we move from ambition to action on climate, realities are starting to hit.
Many companies that have set climate targets are struggling to meet them—particularly when it comes to their scope 3 supply chain emissions. We need to rapidly limit deforestation—but we need new forms of finance to do so. And we must significantly expand the flows of finance for climate action to the Global South. These are not easy tasks and solving these problems will require us to get practical and use every tool we have. Now is the time to step up and deliver.
The voluntary carbon market can play a critical role. It can provide finance for a wide range of emissions reduction and removal projects in the places that need it most, and a way for businesses to be more ambitious, and go beyond their all important decarbonization efforts.
But the market today isn’t where we need it to be. We don’t just need a market that’s three times bigger, or even five times bigger—it has to be a whole order of magnitude larger to deliver the climate impact we need it to. But such scaling requires transformation.
The voluntary market has been held back by legitimate concerns about whether projects that generate credits really deliver emissions reductions and removals, whether businesses that buy credits can do so without delaying decarbonization, and without fear of double counting emissions reductions or removals. There have also been questions over whether it is built to scale, and what needs to be done to ensure the robust guardrails and infrastructure of other financial markets.
Building confidence across the market is fundamental to growing its impact and to boosting flows of carbon finance to the Global South. For this to be a truly global market that brings a range of benefits alongside emissions reductions and removals, all stakeholders need to be involved, and Indigenous peoples and local communities must be front and center of its development.
The good news is we now have solutions to these problems. These are the basis of the transformation that we need to see.
In July 2023, the Integrity Council for the Voluntary Carbon Market launched the first independent global quality standard to define a “high-quality credit”: the Core Carbon Principles (CCPs). Credits that meet the standard’s criteria can be identified by buyers as they are tagged with a “CCP” label by the independent carbon crediting programs that issue them. The CCP label ensures each credit generated by a project is equal to one metric tonne of emissions reduced or removed, and supports sustainable development and biodiversity. The first carbon credits with the CCP label, backed by these strict assessment criteria, are now reaching the market.
Complementing the Integrity Council’s work on the supply side of the market, the Voluntary Carbon Markets Integrity Initiative (VCMI) has worked on codes of conduct for companies using carbon credits, to ensure credibility of their action. The Claims Code, launched in June 2023, encourages companies to be more ambitious, giving them clear guardrails, including types and quantities of credits they should purchase and how to talk about them, to ensure they’re using credits in the right way, and going beyond their internal decarbonization targets. In addition, a new scope 3 claim which is currently in public consultation will enable businesses that are not on track to reduce emissions in their value chain to continue financing climate action by using carbon credits for a limited time.
Meanwhile, the Global Carbon Markets Utility (GCMU) is building the infrastructure needed for the market to operate like a mature financial market with more transparency and accountability. The GCMU is working to increase standardization to facilitate accurate credit pricing and to introduce robust data standards, digitization, and the necessary mechanisms to enforce these standards. This new infrastructure will encourage the financial community to make a substantial commitment to expanding the market.
But these organizations can’t do it alone. We need to collectively move further, faster—and chart a path forward across supply, demand, and within the market to scale high-integrity carbon credits that deliver on their potential.
We’re now at an inflection point. A wide range of governments—from the U.S., U.K., and Singapore to Kenya—have recognised the importance of the voluntary markets. And incoming regulatory developments around the world demonstrate that step-by-step, important foundations are being put in place to build confidence.
But if the market is to succeed, policy makers and regulators must also step up and signal their support and the private sector must invest. We need a harmonized and consistent approach, including alignment with the CCPs as the standard for quality to support a global voluntary market. Doing so will provide a signal to corporations that they can invest with confidence in the market as a complement to rapid decarbonisation of their operations, and make high integrity claims about their action. To build a sense of momentum and scale the market, we need more forward-thinking companies to lead the way. And we need financial actors to continue developing the infrastructure to grow and anticipate the regulatory scrutiny the market would come under at scale.
Between us, we have developed a clear code of claims for companies on how and when they should use credits. We are reviewing and approving types of projects that can be labeled as high integrity and the volume of CCP labeled credits will grow. And we are building the infrastructure to support a transparent, efficient market that’s primed for growth. The foundation is being laid for countries and companies to participate in a high-integrity voluntary carbon market. We need to take action, together, at pace. Every day, every minute, every tonne—counts.
Amy Merrill is the CEO of the Integrity Council for the Voluntary Carbon Market, an independent global governance body for the carbon market. Mark Kenber is the executive director of the Voluntary Carbon Markets Integrity Initiative, a non-profit that works across stakeholders to support the carbon market. And Chris Canavan is the CEO of the Global Carbon Market Utility, which works to build the necessary infrastructure for a carbon market.
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