Speaking to Eco-Business on the sidelines of the GenZero Climate Summit 2025 in Singapore last week, carbon project developers, buyers, sellers and executives from ratings agencies said that sustained demand from “committed” corporate buyers of carbon credits and the potential convergence of the compliance and voluntary markets mean that the conditions are right for a recovery.
From its high in early 2021, the voluntary carbon market has dropped in value in recent years. In 2023 and 2024, millions of carbon credits were deemed worthless, causing the market to shrink by 61 per cent, according to Ecosystem Marketplace, a non-profit that tracks the carbon market from brokers and traders.
“
As a market, we still need to deal with the underbelly of credits that aren’t up to scratch.
Duncan van Bergen, co-founder, Calyx global
Critics have pointed to carbon projects of questionable effectiveness being used by polluters to claim their products are “carbon neutral”, or persuade consumers that carbon-intensive activities such as air travel do not exacerbate climate change.
In Indonesia, one of the world’s biggest markets for forest-based carbon projects, demand for carbon credits has “stagnated”, observed Wily Salim, founder and director of PT Karmic Virya Abadi, an Indonesian company that produces biomethanol from coconut husks. He said this is because Indonesia’s carbon tax has not been implemented – it was slated for launch this year, but has been repeatedly delayed – and pressure on corporates to offset their pollution has been limited.
Traders in other markets are more bullish. “There has been continued buying by both large and medium-sized corporations. But companies are talking about it less than they used to,” said Duncan van Bergen, co-founder of Calyx Global, a carbon credits ratings agency.
Van Bergen said demand is shifting to high-quality carbon credits, although low-quality credits still constitute the bulk of trade. “As a market we still need to deal with the underbelly of credits that aren’t up to scratch. I don’t think we are there yet. That is going to be a precondition for carbon winter to turn into a carbon spring,” he said.
Moves by the carbon credit governance body, Integrity Council for the Voluntary Carbon Market (ICVCM), to tighten the rules for what qualifies as a high quality carbon credit could bring more confidence to the market, observers said. Verra, the world’s largest carbon credits certifier, announced a methodology for retiring coal plants early last week.
Shi Min Tan, head of policy, standards and regulatory affairs for Global Carbon Market Utility, a Bloomberg Philanthropies-backed organisation that launched to build credibility into the carbon market infrastructure, projected that the carbon market would recover to previous levels in the next three to five years.
Urgency among countries and companies to meet near-term decarbonisation targets is likely to drive demand for carbon credits in the near-term, she said.
Shruti Singh, Asia director for climate consultancy, South Pole, said she expects to see an uptick in demand starting from 2027, driven by the reporting deadline for the aviation industry’s decarbonisation body, Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), as well as increased demand for carbon credits under as Article 6 of the Paris Agreement, which allows countries to use carbon trading to meet climate goals.
Watch the video to hear more insights from carbon market players. Other executives featured are Jacqueline Lam, Asia director, Sustainable Energy for All, Jeffrey Chatellier, Jakarta-based chief executive of nature-based solutions firm Forest Carbon, Sheri Hickok, CEO of London-based carbon project developer Climate Impact Partners, and Narendra Prajapati, CEO of Mumbai-based clean energy firm MicroEnergy Credits.
