The voluntary carbon market (VCM) covers less than one-half percent of global greenhouse gas (GHG) emissions. It remains very small after many years of development and reform.
It is recovering from a downturn after press revelations of overproduction of credits in Indonesia and elsewhere. The quality of credits, their actual accounting for removal or avoidance of 1 metric ton per credit, is a constant concern.
Yet this small market plays an important niche role in testing methods and technologies. And it might become increasingly important as it integrates more closely with the mandatory or compliance markets that many countries now plan to adopt.
Compliance markets take on various forms: cap-and-trade, carbon tax, project-based, etcetera. They now cover 23 percent of global GHG emissions, according to a recent report by the nonprofit International Emissions Trading Association (IETA).
Regional, national, and subnational compliance are expected to continue expanding worldwide, eventually operating in some way in most countries. Their appeal to governments lay in their proven capacity to produce revenue while counting toward nationally determined contributions (NDCs) under the UN climate framework.
As their expansion continues they will likely stimulate growth of the VCM, as they accept VCM credits and propel innovation.
Market snapshot
A recent report by AlliedOffsets, a UK-based data and market intelligence provider, reveals some of market’s inner workings,
The report, Voluntary Carbon Market 2025 Review, Emerging Trends for 2026, is assembled from a comprehensive database that tracks more than 36,000 projects. Its sources include the four carbon registries that dominate the market: Verra, Gold Standard, American Carbon Registry (ACR), and Climate Action Reserve (CAR).
The report tracks ‘retirement’ of credits when companies that have purchased credits count them against their emissions in reporting on climate goals. It also tracks ‘offtakes’, which are pre-purchase of credits from planned projects not yet developed.
“It’s a significant part of the market because companies buying via offtake are typically doing so because they can’t find the credits they need on the spot market,” says Anton Root, Co-founder and Head of Research for Allied Offsets.
Such credits are usually generated from emerging technologies like direct air capture (DAC) or from forests planned to be planted.
“For project developers, offtakes are a useful mechanism to get up-front purchasing commitment, which they can then use to start the project,” says Root. “The offtake also allows them to raise additional capital more easily, as they can show demand for future credits.”
Costly technical credits
According to the AlliedOffsets report, the total measure of the VCM in 2025 was $10.4 bn, including the value of retired credits taken out of circulation and announced offtake transactions for future credits.
The report covers many kinds of credits under the general categories ‘nature-based’ and ‘technical’. Nature-based projects include forest conservation projects, while technical projects involve ‘carbon dioxide removal’ (CDR) through technologies such as direct air capture of CO2.
Technical credits, which are the most expensive in the market, some upwards of $500 per credit, are increasing in number. This is in part the result of project developers now putting their projects onto registries after years of R&D and pilot development.
DAC prices, which are the highest of all credits, are falling, which could indicate there is progress in CDR technologies, perhaps anticipating technical breakthroughs.
Anton Root thinks it’s plausible. “As the technologies are starting to scale up, the price per ton of technical credits is starting to come down slowly,” he says.
“But the weighted average price of credits is creeping up a little bit over the past year, reflecting an increased willingness of some buyers to pay for more expensive credits.
He notes that companies’ purchases of CDR credits is a form of investing in clean tech.
“It is important for the development of clean tech, especially so for DAC where the carbon credits are a key source of revenue for the projects,” he says.
Among the top buyers of carbon credits are energy companies including oil majors, while Microsoft is by far the largest buyer of technical credits. Related: Europe’s Rooftop Solar Orders Triple As Gas Prices Surge
UN units
The carbon market landscape is a patchwork of systems. Compliance markets are governed by national and regional policies. The VCM is a fragmented collection of initiatives.
One factor that could forge these into a more unified global market is Article 6 of the 2015 UN Climate Accord. This part of the Paris Agreement has advanced in recent COP summits and is coming into effect now.
Article 6.2 governs bilateral trade between governments to count for or against NDCs. Private groups may also enter bilateral trades to meet compliance obligations. This trade must be carefully managed under national administrative frameworks and UN rules that guard against double-counting of emissions reductions.
The ‘Article 6.2 Emissions Reductions’ (A6.2ERs) are units known as Internationally Traded Mitigation Outcomes (ITMOs) when traded internationally with corresponding adjustments to countries’ NDCs.
This trade is already underway. An early trade occurred when Switzerland entered into agreements with Ghana and Thailand, which authorized the transfer of cross-border carbon credits. In Ghana, a Swiss foundation is supporting a cookstove project and an electric bike startup.
Article 6.4 creates a central crediting mechanism, the Paris Agreement Crediting Mechanism (PACM) for carbon projects, with its own registry operated under the UN framework.
An Article 6.4 rulebook was finalized at the recent COP30 summit in Brazil. The ‘Paris Agreement Crediting Mechanism ERs’ (PACM ERs), are tradeable units also known as ITMOs among countries. But they are subject to a UN Supervisory Body to ensure that standards and methodologies maintain high environmental integrity.
“Article 6.4 should not be understood as a single global trading platform,” says Kutalmis Ersoy, a markets expert with Correggio Consulting in Brussels.
“Instead, it establishes an UN-regulated global carbon market framework, with a central registry and governance system that enables internationally transferable credits to be issued, authorised, tracked, and used across borders.
“In that sense, it functions as a global backbone for carbon crediting and trading, rather than a standalone exchange,” he says.
Ersoy notes there is still no officially announced go-live date for project listings, issuance, or large-scale trading, so broader market activity under Article 6.4 will unfold gradually through 2026.
Going global
Carbon market advocates want to unite the fragmented voluntary market and push it into closer integration with compliance markets. They want to create something like a global commodity market for carbon with integrated markets, standards, and prices.
This could maximize the capacity of the markets to reduce GHGs. But it will require much more than the UN’s efforts alone.
Mark Lewis, Partner & Managing Director of Climate Finance Partners LLC, provides helpful analysis in the IETA Greenhouse Gas Market Report (2025).
He writes that Article 6 credits will drive convergence of the project-based VCM and compliance markets if allowed into the EU’s Emissions Trading System (ETS), which is by far the largest compliance market in the world.
It’s a controversial matter currently under discussion by EU officials considering acceptance of Article 6 ITMOs to meet the Bloc’s 2040 climate target (90 percent net GHG emission reduction relative to 1990 levels).
A provisional EU decision accepts very high-quality international credits equivalent to 5 percent of (base year 1990) emissions but debate is ongoing. Environmentalists argue against it, fearing the international credits will diminish European industries’ incentive to lower GHGs.
Lewis argues that the A6 credits should be allowed into the ETS, as well as industry schemes such as airlines’ mandatory CORSIA, because their large buyer pools will greatly enhance the market for them.
And because the A6 credits count directly toward the Paris Agreement goals, their inclusion in large compliance markets will make them the main instruments of global carbon trade, with all of the market efficiencies that will bring.
“Given that there is no other instrument that can act as a glue between the world’s various carbon markets in this way, how quickly the A6 market scales is crucial to the future health of the global carbon market more generally,” he writes.
“What the EU decides regarding the admissibility of A6 credits under its 2040 target will be decisive.”
A VCM niche
Andrew Cullen, founder of Axis Green, a corporate sustainability advisor based in Abu Dhabi, sees an inevitable expansion of compliance markets with a small but potentially important role for the voluntary market.
“The voluntary carbon market has never really gained scale and high levels of liquidity precisely because it’s voluntary,” he says. “After all, if taxes are voluntary will companies pay taxes?”
He thinks it is a market for a few companies, tech companies, and others with big budgets, to pursue voluntary climate objectives. But as compliance markets expand, the incentives for buying carbon credits will change.
“If CORSIA approved credits for the aviation sector are trading at, say, $15 a ton, and there are more costly credits with a lot of social and environmental benefit selling for $100 a ton, it’s obvious what an airline will buy,” he says.
“It will turn the logic of the voluntary market on its head because companies under mandatory schemes will ask why they should pay above and beyond.”
But the voluntary market will not disappear and indeed will grow as compliance markets expand.
“It will take time but compliance markets will become much bigger,” he says. “Then we might see corporates that want ‘above and beyond’ credits for their public relations or any number of reasons and they’ll buy from projects with more investment going into them.
“So as compliance expands it will drag the volumes in the voluntary market up with it.”
This implies a need to focus on the structure of compliance markets.
“To really increase demand requires more than just cap-and-trade schemes,” he says. “It requires having project-based credits incorporated into these schemes.
“But it will be interesting to see what happens.”
By Alan Mammoser for Oilprice.com