Voluntary Carbon Market: Trust Deficit or Just Fatigue?

2023 has been a tough year for the Voluntary Carbon Market (VCM). A report by a non-profit investigative journalism organization SourceMaterial, the German weekly Die Zeit and the Guardian in January 2023 jolted the market. Would the market have behaved any different even without this report given the inflationary pressures and geo-political headwinds in 2023?

Of course, the market did not recover from that shock. As we inch closer to the end of 2023, the voluntary credit volumes are lower than the previous two years. Does this signal a downward trend or a temporary blip forced by external circumstances?

According to AlliedOffsets, a data and tech firm tracking the VCM market, demand is likely to grow at a steady pace over the next few years. Their VCM Forecast Report, which covers data from 21 registries, gives a bird’s eye-view of the market in terms of supply, demand and the price dynamics.

Carbon specialists we spoke with are convinced that the events of 2023 helped the market strengthen the guardrails and put the spotlight back on integrity. However, we feel that the dust is yet to settle down for a clear picture to emerge.

Meanwhile, ICVCM, an independent governance body for the voluntary carbon market and VCMI, an international non-profit organization with a mission to enable high-integrity voluntary carbon markets have moved quickly over the past few months to establish standards for the sellers and buyers respectively.

As the global carbon compliance market takes shape led by the EU’s CBAM initiative, it is important that VCM gathers momentum quickly for us to have a shot at Net Zero.

After all, it takes two to tango!!!