Gareth Turner, co-founder and director of Numerco, explains how the company has been helping clients navigate the challenges in the voluntary carbon market over the past year and where it is finding future opportunities.

Environmental Finance: What is Numerco's role in the voluntary carbon market (VCM) and how does it support clients?

Gareth Turner: Numerco is an independent energy merchant specialising in the sourcing and supply chain optimisation of low-carbon fuel, renewable energy, and industrial products with a low-emissions focus. With the aim to transition to a decarbonised economy, we work on a multitude of environmental solutions.

Together with our network of partners and clients, we finance, develop, and trade emission reduction projects across many of the carbon taxes and emissions trading schemes worldwide.

EF: What have been the main market developments over the past year?

GT: The carbon market is in transition. There has been a drive towards primary project development, a more tailored approach, enabling greater quality control.

More sophisticated, diligent, mission-driven buyers have entered the space with corporates facing increasing regulatory and reputational pressures, as well as institutional investors and platforms seeking credible, long-term climate solutions.

Customers wish to have more direct links and to be closer to project activities, increasing engagement and transparency, while navigating the ever-more complex pathway to net zero. We are assisting our customers in deciphering the multitude of evolving policy frameworks, ratings, standards, and integrity drives, providing them with the tools to make confident steps around carbon claims.

EF: How has demand shifted?

GT: While transaction volumes fell by around 25% in 2024, prices saw minimal decline while retirements remained stable - a positive sign of resilient demand. More specialised demand has led to tight supply in specific nature-based and removal categories, leading to growing competition for these credits. A push toward perceived integrity has driven transactions for methane/landfill gas (LFG) projects, with offtakes of our pipeline Brazil and Latin American projects increasing at the expense of renewables.

However, regional renewable projects, like our Morocco and South African units, still form a significant part of most buyers' strategies due to pricing pressure from the removal space. A diversified portfolio, with a focus on removals tempered with traditional units, remains the go-to choice to balance quality and budgets.

EF: How have market integrity initiatives helped bolster confidence and, therefore, supported demand?

GT: The drive towards integrity continues in earnest. Positive sentiment remains, and a feeling that the market has progressed from recent controversies with overcrediting and disagreements over the path to best practice. A drive towards removal units is building, with cost differentials meaning that avoidance credits continue to be a foundation of portfolios. Projects need to be assessed on their merits with proper due diligence and transparency, with access to site visits and relationships rather than a single focus on commoditisation at all costs.

A lack of clear fungible policy continues to drive uncertainty in forward investment however we are seeing constructive steps with government oversight of the voluntary carbon markets such as the UK voluntary carbon and nature market (VCNM) framework and EU member states considering allowing voluntary credits to cover up to 3% of their 2040 emission reduction targets, a move that could absorb significant supply and put upward pressure on prices.

Regional carbon tax systems are playing an ever-increasing role as developers and buyers seek security with established guidelines providing confidence and structure.

EF: What else is needed to support the growth of the VCM?

GT: The market needs consolidation and a common direction without killing the VCM's community reach and ingenuity. While most participants welcome the increased scrutiny and transparency to engineer an effective, functioning market, divergent views are creating confusion. Improvements around real-time data, MRV (Measurement, Reporting and Verification), and green taxonomy for the VCM would help buyers make more informed decisions and avoid concerns over greenwashing. A centralised framework that provides clarity on rules and claims is essential.

EF: Are there any new trends or developments you expect to play a major role in the next year, e.g., new technologies, new standards, policy developments, etc?

GT: Policy is the key to providing a longer-term view. Clarity over Article 6 will unlock investment and provide a runway for the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) scheme to build on its momentum. Fungibility between regional and compliance frameworks can help break the deadlock in country-to-country bilateral discussions around implementation agreements. Only then can the carbon markets scale and deliver much-needed environmental benefits.

However, there needs to be flexibility to allow for the use of a multitude of paths to achieve decarbonisation rather than arguing over the minutiae.

For more information, visit https://numerco.com/