Carbon markets are transforming from optional tools into critical keys for global climate finance, particularly as international climate targets tighten and the need builds for more finance to decarbonize the global economy. According to Mark Kenber, executive director of the influential Voluntary Carbon Markets Integrity Initiative (VCMI), voluntary markets could scale to $20 billion–$50 billion annually by 2030 — potentially unlocking $200 billion–$300 billion per year in broader low-carbon investment and development impacts.
VCMI is a nonprofit initiative that provides guidance for companies on how to credibly use carbon credits as part of their climate strategies. Its work is increasingly referenced by governments and businesses seeking to align voluntary action with emerging regulatory frameworks. Kenber envisions a world where VCMI ultimately becomes obsolete, its mission fulfilled. In that world, governments adopt mandatory transition plan frameworks for emitters, and carbon credit use is integrated into national climate strategies. As part of this, Kenber also says the old binary of “voluntary” versus “compliance” markets is giving way to a more integrated ecosystem where policy, quality standards and market infrastructure are converging.
Turbulence and Resilience
The voluntary carbon market (VCM) has experienced turbulent years since its 2021 boom. Transaction volume declined 25% in 2024 to 84 million tons, and market value dropped to $535 million, according to Ecosystem Marketplace’s latest State of the Voluntary Carbon Market report released last week. But this contraction doesn’t mean demand has collapsed. In fact, credit retirements — when a holder “uses” a credit to mitigate their emissions — have remained steady at around 180 million tons annually since 2021, suggesting that end-user demand persists.
Kenber sees this as part of a broader market correction. “We had expansive growth expectations, [from] $50 billion to even $250 billion, but then came intense criticism,” he tells Energy Intelligence in a recent interview. “And yet the market didn’t collapse. It held steady, which shows resilience and latent demand.”
That demand is increasingly shaped by quality. As the Ecosystem Marketplace report notes, carbon removal credits — which physically remove CO2 from the atmosphere through processes like afforestation or direct air capture — commanded an average price 381% higher than reduction credits in 2024. Reduction credits, by contrast, come from activities that avoid or reduce emissions, such as switching to cleaner fuels, but do not remove existing CO2.
These credits are scarce but growing, with strong demand for improved forest management and landfill gas destruction projects reflecting a shift in buyer preference toward higher-integrity credit types. This shift reflects growing emphasis on measurability, permanence and additionality — key factors that determine credit quality. Buyers increasingly favor credits that can demonstrate clear, quantifiable climate benefits and are less prone to reversal or overestimation.
Convergence
Kenber argues that rather than fragmentation, carbon credit markets are seeing convergence. Article 6.4 of the Paris Agreement now explicitly enables multiple credit uses by formally recognizing a range of applications, from national climate targets to voluntary corporate claims, within an internationally governed framework. Countries like Singapore and Colombia are already incorporating voluntary methodologies into domestic or semicompliance systems.
Market actors are also increasingly coalescing around shared standards, particularly the Integrity Council for the Voluntary Carbon Market’s (ICVCM) Core Carbon Principles (CCPs), which define what constitutes a high-integrity carbon credit — covering issues like additionality, permanence, robust quantification and sustainable development safeguards.
According to Ecosystem Marketplace, CCP-approved credits, though still a minority, are starting to influence pricing. CCP recognition has also helped drive a threefold increase in waste disposal credits in the past few years. While ICVCM sets quality thresholds for the credits themselves, VCMI focuses on how companies use those credits credibly as part of broader climate strategies.
Governments are catching on, too. The UK, Singapore and France have all referenced the CCPs in national guidance. “We’re seeing upward pressure for CCP-aligned standards across both voluntary and compliance regimes,” Kenber notes.
Rebuilding Trust
The credibility of voluntary carbon markets had suffered after widespread criticism of legacy methodologies and perceived corporate greenwashing. But Kenber warns against overgeneralization. “Every now and then, there’s a faulty car or washing machine. That doesn’t mean the manufacturer, or the whole market, is broken,” he says.
Both VCMI and ICVCM are pushing reforms. The latter’s CCP labeling is creating a two-tier market, with higher prices for high-integrity credits. Meanwhile, independent rating agencies are helping buyers conduct due diligence.
Still, Kenber believes regulation will be crucial. “It is somewhat crazy that in 2025 … we’re still relying on voluntary action at all,” he says. “The faster the use of carbon credits is covered by regulation, policy and incentives, the more confidence we’ll build in the system.”
Policy Needs
Despite the recent plateau, Kenber see reasons for optimism. Many companies still view carbon credits as essential for addressing residual emissions and meeting interim targets. Tightening climate goals, combined with hard-to-abate sectors, are expected to push up demand, he noted.
Government frameworks are emerging to support that demand. The UK, France and Singapore have issued formal guidance, although in the US, climate policy remains uncertain. Ecosystem Marketplace also notes a growing buyer preference for newer vintages and higher-integrity credits — indicative of a maturing market. Credits from the last five years carried a 217% price premium in 2024, up from just 53% a year earlier.
VCMI’s role, says Kenber, is to bridge the gap until regulation catches up. “We’re providing a framework for credible corporate climate action, ensuring carbon credits are a complement, not a substitute for decarbonization.”
Looking Ahead
With regard to Kenber’s hopes for carbon markets to scale, Ecosystem Marketplace’s data supports this possibility. Despite current contraction, market value remains nearly double 2018 levels, and credit prices are structurally higher than five years ago. This suggests strong foundations for future expansion if credibility, transparency and regulatory alignment continue to improve.
“Carbon finance can be a catalyst for transformation,” Kenber says. “But only if we embed clear standards and policies now so the market grows with integrity, not illusion.”
