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.<\/p>\n
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.<\/p>\n
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. \u00a0<\/p>\n
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<\/a> by the nonprofit International Emissions Trading Association (IETA).<\/p>\n 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.<\/p>\n As their expansion continues they will likely stimulate growth of the VCM, as they accept VCM credits and propel innovation.\u00a0<\/p>\n Market snapshot <\/p>\n A recent report<\/a> by AlliedOffsets, a UK-based data and market intelligence provider, \u00a0reveals some of market\u2019s inner workings,<\/p>\n 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).<\/p>\n The report tracks \u2018retirement\u2019 of credits when companies that have purchased credits count them against their emissions in reporting on climate goals. It also tracks \u2018offtakes\u2019, which are pre-purchase of credits from planned projects not yet developed.\u00a0<\/p>\n \u201cIt’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,\u201d says Anton Root, Co-founder and Head of Research for Allied Offsets.<\/p>\n Such credits are usually generated from emerging technologies like direct air capture (DAC) or from forests planned to be planted.<\/p>\n \u201cFor project developers, offtakes are a useful mechanism to get up-front purchasing commitment, which they can then use to start the project,\u201d says Root. \u201cThe offtake also allows them to raise additional capital more easily, as they can show demand for future credits.\u201d<\/p>\n Costly technical credits <\/p>\n 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.<\/p>\n The report covers many kinds of credits under the general categories \u2018nature-based\u2019 and \u2018technical\u2019. Nature-based projects include forest conservation projects, while technical projects involve \u2018carbon dioxide removal\u2019 (CDR) through technologies such as direct air capture of CO2.<\/p>\n 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.<\/p>\n DAC prices, which are the highest of all credits, are falling, which could indicate there is progress in CDR technologies, perhaps anticipating technical breakthroughs.<\/p>\n Anton Root thinks it\u2019s plausible. \u201cAs the technologies are starting to scale up, the price per ton of technical credits is starting to come down slowly,\u201d he says.<\/p>\n \u201cBut 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.<\/p>\n He notes that companies’ purchases of CDR credits is a form of investing in clean tech.<\/p>\n \u201cIt 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,\u201d he says.<\/p>\n