The voluntary carbon market in 2025: what to expect | Brunswick Group

The voluntary carbon market in 2025: what to expect

Over the last few years, news stories about the voluntary carbon market (VCM) have been predominantly sceptical, if not outright negative. Recent events, however, have given reason to believe that the VCM could receive a more positive reception in 2025.

Two of the most consequential developments last year were the agreement at COP29 of rules around two key sections of the Paris Agreement, Articles 6.2 and 6.4, and the Integrity Council of the Voluntary Carbon Market’s first Core Carbon Principles (CCP) approvals for standards and methodologies to establish a minimum threshold for carbon credit quality.

Looking ahead, what should we expect from the market as it builds on these?

  • A post-COP29 and compliance boost: the agreements in Baku, by establishing a UN-backed carbon market which includes credits from the VCM, lend support to the concept of carbon markets and give carbon credits a renewed legitimacy after a few years of controversy. This should give project developers and credit users more confidence as they engage with the market. Alongside this, there are a growing number of mandatory carbon pricing schemes allowing, or signaling they might allow, the use of carbon credits from the VCM as a compliance route. The EU, for example, has indicated that it may allow carbon credits to be used on its mandatory emissions trading scheme, the EU ETS. Other carbon pricing schemes around the world are already open to carbon credits, including the aviation industry’s carbon pricing scheme, CORSIA, which allows airlines to use certain credits to offset emissions. Together, this could result in a significant demand increase as well as price rises for those credits that are compliance market eligible.

 

  • More companies looking to carbon credits as target dates loom: as we approach 2030, a key year for climate targets, companies will be looking to build up an inventory of high-integrity carbon credits to help meet decarbonisation goals. For many, there is still the unresolved question of the inclusion of carbon credits as part of the Science Based Target initiative’s (SBTi) net-zero pathway. The decision on when and which carbon credits can be used to offset emissions, due at the beginning of this year after several delays, will be watched closely by the market. Regardless of the SBTi’s decision however, there will still be companies turning to the voluntary market to help compensate for emissions. Those that do not have a sectoral decarbonisation pathway set out by the SBTi, such as oil and gas companies for example, and those that anticipate a shortfall in emissions reductions which would otherwise prevent them from achieving their interim targets.

 

  • More and better communications: there have been numerous examples of companies in this space caught by the reputational risk trifecta of an opaque market, low public trust, and incomplete or obscure communications. That has to change if the VCM is to be a credible additional tool for businesses. From the conversations we have had with business leaders, it feels like it is. Companies are acknowledging that they can and should disclose more on how carbon credits are being used. Learning lessons from the past few years, and particularly if credits are being used as a short-term measure to help meet targets, we should expect to see companies communicate more proactively on why they are using carbon credits, where the credits come from, and how they fit into their longer-term decarbonisation plans.

What is clear, as the market shifts and grows in 2025, is there is an opportunity to be part of shaping it.  Now is the time for businesses to get to grips with how they want to use credits, what types of credits – nature-based, tech-based, removals, avoidance? - and how they want to communicate on the subject.

If you would like to discuss any of these topics in more depth, please contact Brunswick’s Director, Carbon Intelligence, Constance Azis: [email protected] or our Global Managing Partner of Brunswick’s Sustainable Business Practice, Wolfgang Blau: [email protected]