UK-Backed Coalition Aims to Scale Voluntary Carbon Markets

The Coalition to Grow Carbon Markets, launched last week at London Climate Action Week, also includes the governments of France and Panama, and is supported by the government of Peru. 

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A new coalition created by the governments of Kenya, Singapore, and the UK will work to develop the emissions trading markets for corporations and other entities seeking to invest in carbon credits.

The goal of the new group is to boost demand for carbon credits not only in the so-called compliance markets, which help nations meet their emission reduction commitments from the Paris Climate Agreement, but also in the voluntary markets, where companies can buy credits to establish claims such as “Net Zero” or “carbon neutral”. In its launch announcement, the founders stated that they recognize “the critical role of carbon markets and corporate use of carbon credits in delivering climate-positive growth globally.” 

Public confusion and disappointment continues to arise from poorly executed or fraudulent initiatives that failed to deliver on their promises. For example, a November 2024 study found that less than 16% of the carbon credits issued to the investigated projects constitute real emission reductions. Meanwhile, auditing alone does not guarantee that the projects will perform what they claim. The result, according a new report by Accenture on behalf of the Voluntary Carbon Markets Initiative (VCMI), is that concerns about credit quality, transparency and integrity are the biggest barrier to companies participating in voluntary carbon markets.

Last month, a UN body known as the Paris Agreement Crediting Mechanism (PACM) adopted a global set of standards to help verify carbon reduction projects, making them more credible and reliable in the face of global skepticism. While the new UNFCCC standards initially only cover afforestation and cook stove projects, they were welcomed by international market players as an important step towards making carbon credits more credible.

The Coalition to Grow Carbon Markets has committed to releasing a set of shared principles on the voluntary use of high-integrity carbon credits by businesses to provide consistency in approach across jurisdictions. VCMI will host the secretariat for the new initiative.

“The world will miss its climate targets unless more finance flows to projects and businesses that can cut emissions quickly and affordably while boosting growth,” the new coalition’s leadership said in the launch announcement. “Carbon markets are an under-used tool to value carbon, enable more ambitious climate action, and drive private sector investment into the global low-carbon transformation.”

The coalition hopes that their shared principles will help restore private sector demand for carbon credits in order to increase the flow of private finance to activities that accelerate the pace of global emissions reductions, restore nature, cut pollution, and deliver lasting benefits for local ecosystems and communities.