Is the voluntary carbon market finally ready to grow up?

By Genevieve Redgrave

It has been a depressed year for transactions, but winners of Environmental Finance's annual Voluntary Carbon Market rankings see hope amid increasing levels of government oversight. Genevieve Redgrave reports

With preparation beginning for a suspected demand "surge" over the next year, new challenges are emerging in the Voluntary Carbon Market (VCM).

While market participants remain optimistic about incoming integration with compliance markets and digitalisation, they have urged for greater standardisation and clarity.

Environmental Finance's Voluntary Carbon Market Rankings are an annual poll of the market, in which participants vote for the leading companies and initiatives that exhibit best practice or innovation.

This year saw high interest, with 3365 votes across 23 categories.

EcoSecurities and Numerco are the biggest winners this year with two awards each. Some new winners were also awarded, including Triangle Digital, Abatable and Tullett Prebon.

Part one of the winners' article: demand, standards and increasing oversight

Winners highlight that the previous scandals in the market left a lingering effect on demand, with some corporates unwilling to return to the market. However, in a shift from the previous two years, it was noted that this was not as significant as before, and demand shows positive signs of returning.

Shelley Estcourt, director for Africa at TASC, winner of Best Project Developer for Energy Efficiency, says criticism caused a "fundamental shift" in the market, which made voluntary buyers nervous.

However, "there is a definite shift in buyers coming back", she says.

Ellery Sutanto, chief commercial officer of Singapore-based Climate Impact X (CIX), winner of Best Carbon Exchange, says the market has "definitely been improving" in the past year.

This is despite a "drastic drop" in transactions. There is "no good source" to measure transaction volume, he says, but he points towards Ecosystem Marketplace's 2024 State of the Voluntary Carbon Market report which found that transaction volumes continued to decline in 2024, with around 182 million tonnes of credits retired in 2024.

This is the lowest transaction volume since 2018, representing around $535 million of total value. 2023 saw a total transaction value of $723 million.

The report says this does not reflect "weak demand", however, but instead a slowdown of retirements from older methodologies. It claims there will be a delay as newer projects based on updated methodologies generate credits, leading to short-term supply constraints and lower transaction volumes. This is part of the market "building back", it says.

The report also finds that the average price of credits sits at $6.34 per tonne of carbon dioxide emissions, down from $6.71 in 2023 but almost double the average 2020 price. Carbon removal credits continue to trade at a higher price, as well as those from agroforestry, blue carbon and Afforestation, Reforestation and Restoration (ARR) projects.

Data from Numerco – winner of best wholesaler and best project developer, renewable energy – indicates that transaction volumes fell by around 25% in 2024 but prices declined only "modestly" and overall credit retirements remained stable.

Gareth Turner, CEO and co-founder, tells Environmental Finance that this is "evidence of resilient underlying demand". Some credit types are seeing "growing competition" due to demand significantly outstripping supply – particularly nature-based and removal credits.

CIX's Sutanto agrees with these broad trends in the market – "even if it's not trading, there has been a lot of interest, both on the bid and offer side". He says there is "a lot more interest, a lot more excitement and a lot more activity".

He attributes this to better confidence, driven by the launch of further standards in the market, including the Integrity Council for the Voluntary Carbon Market's Core Carbon Principles (CCPs). These are a set of 10 science-based principles aiming to identify whether a carbon credit creates real, additional and verifiable carbon impact.

Many winners note that clients have specifically been looking for the CCP label as a barometer of a 'good credit'. Santiago Parilli, broker, renewables at Tullett Prebon – winner of best broker – says the growing interest in the label suggests clients are demanding greater specificity "in order to avoid any claims of so-called greenwashing".

However, according to Alex Saer, CEO at Cercarbono, awarded Best GHG Crediting Programme/ Standards Setter, while the CCPs have had a "positive impact on the buying side, the response hasn't been on the dimension that we suspected".

In previous editions of this survey, winners expected the CCPs to be transformational in bringing demand back to the market.

Winners of the 2025 edition highlight that very few credits have currently been approved to use the label, and often these trade at low prices.

Bill Goldie, sales director at trading and advisory firm Redshaw Advisors – winner of best trading company – argues that buyers might be unwilling to pay more for a credit that looks the same on the surface as something they purchased more cheaply previously.

Other winners are optimistic that 'meta-developments' in the market, including the CCPs, are signals that the market is maturing and will lead to greater demand.

There is a "demand lag", according to Sheri Hickok, CEO of Climate Impact Partners, winner of Best Offset Retailer, but she sees encouraging signs that demand is building.

"We are seeing more strategic engagement from clients who have net zero goals", she says, and more clients looking for long-term offtake agreements.

While these have been commonly associated with the large technology firms in recent years, winners highlight that these deals are now being struck with a broader range of companies.

Lev Gantly, partner at Philip Lee, winner of Best Law Firm, argues that while the market is still considerably muted, many firms are locking themselves into long-term deals that will generate credits over the next 20 to 30 years.

However, "you never hear about it", he says. "People aren't shouting about it from the rooftop because, at this point, it doesn't matter".

"It will only matter in 15 years from now, when they hit whatever targets they're trying to hit", he says.

This reluctance to publicise their deals is particularly prevalent in markets where sustainability has been hit by the ESG backlash, including the US. While many firms are securing offtakes in recognition of their growing necessity in long-term net zero goals, some will inevitably "leave it for a few years for the market to recover" before engaging significantly with the market, he says.

He points to high interest from commodity firms, although this rarely makes the headlines.

Juan David Duran Hernandez, CEO of EcoRegistry, awarded Best Registry, adds that, despite some high-profile deal announcements, technology giants are rarely the leaders when it comes to the number of retirements. Instead, it is mostly high-emitting firms, such as those operating in the steel, oil and gas sectors.

Some hesitancy to purchase credits clearly remains, which is leading to much longer lead-times, according to the winners.

Andre Fernandez, CEO of Invert, Best Project Developer, Forestry and Land-Use, notes that there are "more and more high-profile buyers" but many potential buyers are carrying out extensive due diligence for a single transaction before they're willing to "lock in" longer term agreements. He believes this is largely because "internally on their end, they don't want to make a big mistake".

Shelley Estcourt, director of Africa for TASC, awarded best project developer for energy efficiency, adds that there is an increasing level of due diligence from potential buyers – either from internal teams or external providers. This is an "additional level of comfort" for buyers that are still tentative about the market.

It includes providing further quantitative data and seeking external ratings or auditing.

While she recognises the need for greater due diligence, she highlights that this can often be an arduous and expensive task for developers that are already stretched thin – and adds that the price of credits still rarely reflects increasingly arduous processes.

However, Fernandez is optimistic that early due diligence will mean "there will be a lot less friction in future deals".

He predicts 2026 will be an "inflection point" for these long-term offtake deals, as companies will begin to look for 10-year deals rather than two to three-year deals.

Climate Impact Partners' Hickok thinks offtake deals will remain in the mid-size 10-year time-range. While the firm has been involved in a 30-year deal, she argues that more sustained demand will be needed to make these transactions viable, along with greater certainty. "We need to walk before we can run", she adds.

Numerco's Turner argues that developments such as the CCPs, are "providing buyers and investors with clearer standards and greater confidence that the credits they purchase represent genuine, effective contributions to global climate goals".

Government oversight

Many winners predict that much of this certainty will come from increasing government oversight of the voluntary carbon markets and further integration into compliance markets.

This includes the Coalition to Grow Carbon Markets, launched by the UK, Kenya and Singapore governments earlier this year. It aims to develop shared principles on how carbon credits can be used by businesses, to be unveiled at COP30 in Brazil later this year.

Individual governments will then be expected to develop their own national principles, which might vary from the global principles to take into consideration varying local contexts.

Giulia Carbone, director of the Natural Climate Solutions Alliance, winner of Best Initiative, says this coalition will hopefully make governments "finally understand the value" of carbon markets and ensure the right frameworks are adopted.

"We need a common framework", she says, adding "businesses will benefit from some similarities in how carbon is going to be regulated in different countries".

A voluntary market doesn't mean it has to be badly regulated, she argues, "it has to be regulated so that the bad players [are taken out]". Governments should therefore be encouraged to create the ecosystem for the voluntary carbon market to flourish and support "all actors to take advantage of this".

Pablo Fernandez, CEO of Ecosecurities, winner of two Best Project Developer categories, blue carbon and overall, says it would be "a suicidal move" for a developer to develop a project without any government engagement.

While this would have been previously possible, high-profile scandals highlighted to governments that they did not know what was happening in these markets. Many "felt like they were losing track of the situation" and have stepped in to provide more guardrails. As a result, "voluntary doesn't mean full freedom".

As a project developer, this is a "very big change and we need to embrace that as part of the way forward".

Government action also confirms to participants that the market will continue to operate and provide some certainty about its future.

This is leading some buyers to choose credits which either have some form of government backing, or where there is an expectation that they will be further integrated into existing compliance markets.

The EU, for example, is expected to integrate voluntary carbon removals into its Emissions Trading System, and Singapore also allows voluntary credits to be surrendered to meet its carbon tax system.

CIX's Sutanto argues this "gives additional demand boost and credibility to private project based credits".

Tullett Prebon's Parilli adds that growing integration will help cause an "injection of demand into the VCM". He highlights the Singaporean approach is an example of how "the VCM could fill in many compliance schemes".

Many participants, which previously only operated in the voluntary market, are therefore looking at cross-overs with compliance markets.

While demand signals can still be unclear in the voluntary carbon market, decision-making is much simpler in a "compliance-like market", Invert's Fernandez says.

For a developer, "you're not limiting your sales by developing the projects to be compliant in other markets, you're just opening another door".

However, the lack of clarity on some potential compliance-like markets – particularly Article 6 or CORSIA – is a frustration for many.

Article 6 and CORSIA

Article 6 refers to the use of carbon markets to help countries meet their emissions reduction targets (Nationally Determined Contributions). Article 6.2 is the mechanism for trading carbon credits (known as Internationally Transferred Mitigation Outcomes or ITMOs) through bilateral agreements, whereas Article 6.4 refers to the creation of a UN-supervised voluntary carbon markets.

Project developers are also looking to align their projects for potential integration into CORSIA – the Carbon Offsetting and Reduction Scheme for International Aviation. Set up by the International Civil Aviation Organisation (ICAO) to address the emissions caused by international flights.

This only applies to the international flights between the 129 states participating in the scheme. Only credits explicitly labelled as CORSIA-eligible by ICAO-approved registries qualify.

CIX's Sutanto tells Environmental Finance that, while CORSIA shows a lot of potential to boost demand in the voluntary carbon market, "supply coming online has been slow".

As of June, only 15.85 million CORSIA-eligible credits had been issued by a single Reducing Emissions from Deforestation and Forest Degradation (REDD+) project in Guyana, according to research by carbon credit rating agency Sylvera.

Sutanto predicts 2026 will be a "watershed year" for CORSIA, as its first phase will come to an end at the end of the year. "If we cannot get more volume of supply in the market then it is a risk coming to the end of phase one."

Tullett Prebon's Parilli states: "Given the lack of supply there is a noticeable amount of counterparties waiting to get involved, but [they are] less willing to take the delivery risk given the difficulties with aligning [with] multiple governments' commitments".

Cercarbono has been applying for its methodologies to be eligible for CORSIA for over four years and they have still not been approved. Its CEO Saer says the process has been "pretty challenging and at some points painful".

The process often involves receiving technical questions and then meeting with a technical advisory board soon after. A decision is then given many months later.

"It's not an iterative process", he says, "you only have one opportunity and one shot".

Despite these challenges, Saer says it is still beneficial for standard setters to get this approval or the CCP label – particularly for newer standards looking to attract developers. "The decision to switch to another standard relies on the market opportunities that the standard has", he says. "We need to position the standard to have more acceptance on the buyer side and that lies [with] the accreditation we have".

TASC's Estcourt agrees that receiving Article 6 and Corsia labels are critical to capitalise on expected incoming demand – the project developer has already received a significant number of inquiries on whether its credits align with CORSIA and Article 6. It also expects that these credits will trade for a higher price.

BioCarbon Partners – winner of Best Project Developer, Biodiversity – notes that Article 6 developments are "reshaping demand dynamics". Nic Mudaly, CEO, observes that "buyers are increasingly seeking projects that align with national frameworks and can demonstrate integration into host country NDCs".

This is a "positive shift" for the developer, he says, as it "reinforces the importance of government partnerships, ensures community benefits are embedded at scale, and signals that future demand will reward projects with integrity, alignment and long-term impact".

However, it remains a difficult process for developers, particularly when also looking to align with domestic compliance markets. "It's an additional burden on the project developer, with additional costs to go through these step by step. It's a minefield but I'm cautiously optimistic that we are getting there", says Estcourt.

Valerio Magliulo, CEO and co-founder of Abatable, winner of best market innovation, notes that, while Article 6 and CORSIA markets present "huge potential", buyers are currently unclear about their specifications and how to comply with them – particularly those which also fall under national compliance systems.

Saer adds the uncertainty "has had an impact on the buyer side because at some point they want reliability on the market, and they are not seeing those signs right now".

He predicts that this will "settle down" over the next year when governments clarify their own national rules and "Article 6.4 starts working and all those rules are incorporated into the VCM".

Numerco's Turner adds that simplification is required "to create the necessary fungibility of credits within different compliance frameworks and help break the deadlock in country-to-country bilateral discussions around implementation agreements".

He adds: "Only then can the carbon markets scale and deliver much needed environmental benefits".

Estcourt welcomes progress from Zimbabwe, which has set out some of its national rules – although this still remains subject to confirmation. She calls on other governments to "hurry up a bit".

Archit Srivastava, vice president of strategy and growth, at Earthood, winner of Best Verification Company, argues that it is in government interests to confirm their national frameworks for Corresponding Adjustments – which wipe the emissions reduction from a host country's own inventory and transfer them to the other party. Corresponding Adjustments are required in both Article 6 and CORSIA.

"Only countries which have progressed [on this] are going to see more traction", he says, arguing that "project developers have been waiting for opportunities and they don't want to wait another year and a half to deploy their capital".

"Whichever country is developing robust systems, predefined requirements, and [has] agreements in place will attract project developers", he predicts.

Another winner, who wishes to remain anonymous, argues that much of the uncertainty surrounding Article 6 was expected, as the rulebook remains very difficult for countries to follow and implement in a way that incentivises investment.

This is part one of the Voluntary Carbon Market awards. Part two, covering the increasing involvement of financial institutions in the market and growing use of rating agencies, can be read here.