By Dr. Sven Kolmetz, Chair, Project Developer Forum

The voluntary carbon market (VCM) weathered another challenging year in 2024, characterised by depressed prices and sluggish retirement rates. Yet beneath these headwinds, several developments laid crucial groundwork for future growth.

Market maturation accelerated as quality considerations took centre stage, driving substantial improvements in standards and verification processes.

The Integrity Council for the Voluntary Carbon Market (ICVCM) reached a significant milestone with its first Core Carbon Principles (CCP) approvals, establishing new benchmarks for credit integrity. Meanwhile, compliance markets made tangible progress in incorporating VCM credits into their frameworks, signalling growing recognition of high-quality voluntary credits. The breakthrough agreements on carbon markets and climate finance at COP29 marked a turning point, generating renewed optimism for a market revival in 2025.

Against this backdrop of emerging opportunities, the Project Developer Forum has seven key aspirations for the voluntary carbon market in the year ahead.

1. To see the first credit issuance under the Paris Agreement by the end of the year. Under Article 6.4 of the Paris Agreement, COP29 established groundbreaking rules for countries to create, trade, and register emission reductions and removals as carbon credits. This breakthrough finally enables countries to purchase verified removals and reductions from carbon projects in developing nations, including renewable energy projects, rainforest protection, and reforestation efforts, and count these towards their national targets. While timings are ambitious, the Forum would like to see the first issuance under the Paris agreement by the end of this year, providing a much-needed boost to the voluntary carbon market, and paving the way for others to follow.
2. CORSIA to gain further momentum in aviation markets as the most effective complement to emission reduction efforts. Carbon offsetting is crucial for addressing residual emissions in aviation’s net-zero transition, given the sector’s hard-to-abate nature. While CORSIA provides a market-based mechanism to drive emissions reductions in international aviation with stringent criteria for ensuring real, accurate, and permanent emissions units, credit supply remains constrained and project eligibility limited. The upcoming ICAO Council meeting in March represents a crucial milestone, where successful methodology reassessments could significantly expand both eligible project types and credit availability within the First Phase.
3. A meaningful recovery in carbon prices. Throughout 2024, carbon prices continued their decline while market activity remained subdued. However, significant policy developments, particularly the COP29 breakthrough on Article 6, have laid foundations for future market growth. While financial institutions continue building their carbon trading capabilities, the current price depression threatens more than commercial interests. Our projects deliver tangible social, economic, and environmental benefits to communities and ecosystems. Sustained low prices risk derailing numerous initiatives, jeopardising their intended positive impacts across multiple areas of sustainable development. Encouraging measures such as carbon taxes or pricing mechanisms in major developing countries, alongside rising prices in developed markets, would help support fairer pricing for VCM projects, ensuring they remain viable and impactful.
4. Enhanced recognition for high-quality offset and contribution projects. The market needs to shift focus toward acknowledging projects that meet rigorous standards, rather than dwelling on greenwashing allegations based on outdated or misrepresented information. Much of the recent criticism targets historical CDM projects or retroactively applies new criteria, rather than evaluating projects against standards applicable during their development. This creates an unstable environment, exacerbated by additional stakeholders such as ICVCM, VCMI, and rating agencies introducing new, sometimes subjective, criteria on top of those set by standard organisations.
5. Greater acknowledgment of corporate climate action. Companies making genuine efforts toward comprehensive climate mitigation strategies face disproportionate criticism, while others, including major institutions and alliances, quietly retreat from climate commitments when public attention wanes. This dynamic, coupled with the lack of scrutiny on companies taking no climate action, undermines progress. We advocate for increased recognition of companies effectively integrating offsets within broader net-zero strategies.
6. Improved standards alignment and consistency. The proliferation of VCM standards creates confusion among market participants, particularly given varying levels of quality and rigour. In this period of intensified market scrutiny, maintaining standard integrity is paramount for sector credibility. Priority should be given to harmonising standards and criteria while ensuring robustness, avoiding unnecessary fragmentation or constant revision that can discourage genuine climate action.
7. Integration of offsetting into SBTi’s revised net-zero standard. The upcoming revision of SBTi’s Net Zero Corporate Standard presents an opportunity to include Scope 3 emissions offsetting. This inclusion could catalyse transformation in the carbon market by enabling thousands of global companies to offset their value chain emissions. Given that most companies face unavoidable emissions in their value chains, combining ambitious abatement with strategic offsetting represents not just a practical approach but a necessary pathway to achieving meaningful net-zero status.

As the voluntary carbon market stands at a critical juncture, these seven aspirations offer a way forward for revitalising carbon offsetting efforts. By focusing on credit integrity, policy alignment, corporate recognition, and market innovation, we will see the evolution of a market which has a pivotal role to play in delivering meaningful climate action and sustainable development.

Any opinions expressed in this commentary reflect the views of the author and not of Carbon Pulse.