The past 12 months in the voluntary carbon market saw a big international project leap forward, multiple governments develop credit projects, an industry veteran faces criminal charges, significant layoffs at an organization central to the market and fundamental disagreements within an initiative designed to put fundamental disagreements to rest. In short, it was business as usual.
To understand another action-packed year and get a sense for what’s ahead, Trellis asked carbon market leaders to identify and interpret the key events of 2024. Here’s what they told us.
A key player makes its first moves
Carbon markets are often described as a Wild West. If so, the Integrity Council for the Voluntary Carbon Market is not quite a gun-toting new sheriff, but perhaps a lawmaker intent on order. The council’s best-known initiative is the Core Carbon Principles (CCPs), an integrity label designed as a quality threshold. If a credit can’t earn the label, buyers should think hard before purchasing it.
The council made it first awards in June to seven methodologies for capturing methane from landfills and destroying greenhouse gases from refrigerators and other discarded equipment. This class of credits has attracted relatively little controversy, partly because the projects they help fund are unlikely to take place without credit revenue — an integrity requirement known as additionality.
But researchers at Carbon Plan, a nonprofit that analyzes climate solutions, quickly pointed out something suspicious: existing projects that now qualify for the CCP label have in the past continued to operate methane collection — and in some cases expanded it — in years they received no credit revenue.
“Those planning to rely on the ICVCM quality label should proceed cautiously,” the Carbon Plan team wrote. “The ICVCM process may not be set up to reliably separate the wheat from the chaff.”
A council announcement in November followed a similar pattern. This time, projects that reduce emissions from deforestation and forest degradation (REDD) were the focus, including those that qualify for a methodology developed by Verra, a leading standard-setter. The methodology “uses the latest science and remote-sensing technology to address the integrity criticisms that have plagued REDD projects,” said Toby Janson-Smith, the organization’s chief program and development officer. Soon after the decision was published, however, current and former advisers to the council objected, claiming the methodologies would not ensure additionality and might allow project developers to claim a greater climate impact — and therefore more credits — than projects deserve.
To be fair to the council, some level of disagreement was inevitable in a sector where divided opinions are the norm. The council was also praised for its decision not to approve a slate of renewable energy methodologies that have generated credits many do not consider additional. Approximately 236 million unretired credits, almost a third of the voluntary carbon market, are covered by these methodologies, the council noted.
Voluntary, meet compliance
“Policy makers around the globe became significantly more active,” said Janet Peace, a carbon market expert at solutions developer Anew Climate, when Trellis asked her to name 2024’s key trends.
In Singapore, for instance, the government raised its carbon tax to close to $20 per metric ton and advanced plans to allow companies to use credits to offset up to 5 percent of taxable emissions. Similar initiatives are underway in Taiwan, Japan and elsewhere, noted Anton Root, co-founder of AlliedOffsets, which provides data on carbon markets.
Existing projects also moved forward. When fully operational in 2026, theEuropean Union’s Carbon Border Adjustment Mechanism (CBAM) will require importers of steel and other carbon-intensive products to purchase a new class of offset — a CBAM credit — to compensate for the emissions embedded in their goods. Perhaps most significantly, delegates at this November’s COP29 talks agreed to set up the Paris Agreement Crediting Mechanism, UN-run carbon trading system.
The moves blur the distinction between voluntary trading and compliance markets, which allow companies to trade credits to meet government-mandated emissions targets. “Until now, we’ve talked about voluntary and compliance markets,” said Mark Kenber, executive director of the Voluntary Carbon Markets Integrity Initiative, which helps companies and governments make responsible use of carbon markets. “The distinction hasn’t worked. Rather we should be thinking about use cases.”
There’s no consensus on the impact of this proliferation of credit types and oversight bodies. There are variations in the quality thresholds the different systems require and uncertainty over how the trading schemes will interact. One consequence will likely be higher demand for credits, which will drive up prices. It could also create local price ceilings that prevent project developers from breaking into the market, notes Root.
Longer-term, the future will be more government oversight, predicts Kenber. “It may look messy,” he said, “but it’s part of an unscripted shift from voluntary to compliance.”
Cookstoves controversy
Ken Newcombe was a well-known figure within carbon markets. He’d played leading roles on carbon finance projects at the World Bank and Goldman Sachs. From 2007 until the end of last year, he sat on Verra’s board of directors.
Newcombe’s most recent project was audacious. C-Quest Capital, a company he founded and led, was distributing cookstoves across rural Africa, Central America and Southeast Asia. Because the stoves were designed to be more efficient than existing cooking methods, CQC could generate revenue by selling carbon credits for the emissions saved when recipients used less fuel. Other organizations have generated credits in a similar way, but CQC’s project was notable for its scale: the company claims to have distributed million of stoves and has secured more than $100 million in investments.
The CQC story unraveled this year. In June, the company announced that an internal investigation had identified “wrongdoing” by Newcombe. Soon after, an exposé in the Washington Post alleged that CQC’s stoves were not being used as intended, resulting in the issuance of large numbers of invalid credits. In October, Newcombe was charged with fraudulently obtaining credits worth tens of millions of dollars.
The controversy was another bump in a turbulent couple of years for Verra, which created the methodology that CQC was following and many others. The organization’s CEO stepped down in 2023 following negative stories about projects that follow its methodologies. This October, new CEO Mandy Rambharos announced a 25 percent reduction in the organization’s workforce designed to “direct our energy and resources toward the programs and services that matter most: maintaining the rigor and integrity of our standards programs, effectively supporting our stakeholders, and partnering with a broader ecosystem to improve and strengthen the markets.”
What to watch for in 2025
An optimistic reading of 2024 would be that a corner has been turned. The controversies were painful, but a necessary stage in bringing more integrity to the market. Verra, the ICVCM and others are now producing more rigorous methodologies. Increased government involvement will further strengthen buyers’ confidence. There’s tentative evidence for this rosy picture. One major carbon trading company recently told Bloomberg it was preparing for growth, for example. Finance company MSCI reported an uptick in the quality of credits being retired and predicted the voluntary carbon market would expand from $1.5 billion in 2024 to between $7 and $35 billion in 2030.
Disputes are almost certain to continue, however. One issue is credits generated by projects that capture carbon dioxide from the atmosphere. The captured carbon needs to be durably stored, but there’s no consensus on what that means. Freya Chay, an author of the Carbon Plan landfill study, cited recent research showing that carbon must be locked away for thousands of years for removal projects to help stabilize climate in the way scientists hope they will. But the ICVCM and others “fail to meaningfully differentiate between carbon credits that offer different storage durabilities,” she added.
Market participants are also awaiting a critical decision from the Science Based Targets Initiative, which is due to update its Corporate Net-Zero Standard next year. The organization experienced a staff mutiny in April when it announced plan to give companies greater flexibility in the use of carbon credits to hit emissions targets, a move which carbon market advocates had welcomed. The SBTi’s next update, issued in July, suggested it had reversed its decision, but did not provide details. An updated standard is expected early next year. Whatever the decision, one thing is certain: The ensuing debate will be heated.
