Voluntary Carbon Markets (VCMs), while still a small piece of the global climate puzzle, are increasingly being recognized as a powerful tool for accelerating decarbonization. Unlike compliance markets, which are mandated by governments and regulate emissions through legal caps, VCMs operate on a voluntary basis—allowing companies and organizations to purchase carbon credits to offset their emissions. Though voluntary in nature, the VCM is evolving into a critical mechanism for funding emerging carbon removal technologies, particularly high-quality, engineered solutions like mineralization and direct air capture.
These engineered solutions are essential to achieving net-zero emissions, but they are expensive and difficult to scale without significant investment. Some carbon removal credits can cost over $500 per ton. According to Lars Kroijer of AlliedOffsets, the VCM—though currently tiny and covering only about 0.3% of global emissions—has the potential to grow by orders of magnitude. His company tracks thousands of projects across the globe and sees the voluntary market as an essential driver of innovation. The key, he argues, is attracting private capital to fund “moonshot” technologies that could dramatically lower the cost of carbon removal.
While tree planting and nature-based solutions remain important, they alone cannot meet global carbon removal needs. Engineered solutions must scale quickly and affordably, and the voluntary market is uniquely suited to support this effort. A growing convergence between voluntary and compliance markets is fueling optimism. Increasingly, compliance regimes are beginning to accept voluntary credits, providing a pathway for projects to gain broader market access. For example, Singapore’s carbon tax scheme allows regulated entities to use eligible voluntary credits for up to 5% of their emissions liabilities.
Governmental interest in VCMs is also rising. Many now view voluntary markets as a strategic way to attract private investment into climate mitigation—particularly in developing countries. Projects funded through the VCM not only cut emissions but also deliver economic benefits to host nations. Article 6 of the Paris Agreement is accelerating this trend by enabling countries to trade carbon credits through formal bilateral agreements (Article 6.2) and eventually a centralized UN registry (Article 6.4). Switzerland has already engaged in such partnerships with Ghana and Thailand, supporting initiatives like clean cookstoves and electric mobility, generating credits known as Internationally Transferable Mitigation Outcomes (ITMOs).
Another source of demand is the aviation sector. Through CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), airlines are required to buy high-quality carbon credits from the voluntary market to offset international flight emissions. With Phase 2 set to expand participation after 2027, demand for VCM credits is expected to grow substantially.
Looking ahead, companies are advised to begin securing carbon credits now while prices remain relatively low. A surge in demand is expected by 2030, when many national net-zero targets become binding. Diversifying credit portfolios now can help hedge against regulatory uncertainty and future price spikes.
In sum, the VCM is no longer just a peripheral tool for climate action—it’s becoming central to how the world funds and scales breakthrough carbon removal technologies that could shape the future of decarbonization.
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