Resilience Dispatch #36: A Market in Transition

Jun 1, 2024
In this edition: New data on the voluntary carbon market shows a market in transition.
Missed our last Dispatch? A Hopeful Story About Water

In this edition


On May 31st, we released our annual State of the Voluntary Carbon Market report, against a backdrop of some very important developments in the carbon market. Within the span of two weeks, the White House released new Principles for High-integrity Voluntary Carbon Markets. The Symbiosis Coalition made an advance market commitment for up to 20 million tons of nature-based carbon removal credits by 2030. And then the Integrity Council for Voluntary Carbon Markets (ICVCM) announced its approval of the first seven carbon credit methodologies that meet its high-integrity standards (known as the Core Carbon Principles).

These events arrive after a challenging year in many ways for the voluntary carbon market. Our global analysis finds that market transaction value dropped 61 percent year-on-year, driven by a fall in transactions for REDD+ and renewable energy (which make up the majority of the market).

The data show us a market in transition, as important integrity guardrails are being put into place. In many ways, 2023 was a year spent in limbo, as buyers waited for the ICVCM Core Carbon Principles, VCMI Claims Code, and Verra consolidated REDD methodology to come into operation. In the first six months of 2024, we’re already seeing signs of both stabilizing prices and strong future demand, such as the Symbiosis announcement and new Emission Reduction Purchase Agreements signed for jurisdictional REDD+ credits from Ghana and Costa Rica.

A year’s worth of market data allows us to see nuance in the numbers. For example, the finding of credit transactions declining reflects more complicated dynamics than a simple demand contraction – including a drop in speculative trading, and some buyers stepping back after over-purchasing in previous years. Meanwhile, our data on credit retirements and project registrations (particularly for nature-based projects) in 2023 show a different trend: one of long-term supply and demand remaining robust. That “big picture” overview is one of the benefits of these reports.

We’re also tracking the rollout of Article 6 of the Paris Climate Agreement on carbon trading mechanisms. Significant uncertainty remains around Article 6 implementation, how it will interact with the voluntary carbon market, and how countries should be thinking about their national A6 strategies. The world is at a pivotal moment for ensuring success of the Paris Agreement targets. And yet I don’t see the necessary infrastructure for data-sharing and decision-making in place, so that countries can design strategies around their Nationally Determined Commitments as effectively as possible. We need to build that, quickly.

Most troublingly, the report shows that a substantial amount of private finance to forest- and nature-based climate solutions, particularly in the Global South, evaporated last year. Transactions for nature-based credits plummeted by nearly 70%, from $1.1B to $351M. So, some $750 million of climate finance did not flow to tropical forests last year. Some Projects in Asia, Latin America, and the Caribbean, where the majority of these projects are located, bore the brunt of that fall – an unintendedly broad consequence, perhaps, of heavy recent scrutiny of certain projects and methodologies.

In this Dispatch, we’ll cover some findings of the State of the Voluntary Carbon Market report, and are also pleased to share some insights and reactions to the report’s findings from experts in the field. We enjoy our role in helping to host the conversation around market direction and design, and we are grateful to all of you for taking part in it.

Michael Jenkins


A new report by Ecosystem Marketplace, On the Path to Maturity: State of the Voluntary Carbon Market 2024, provides a comprehensive overview of the global supply and demand of voluntary carbon credits in 2023. The report highlights that despite an overall market contraction, there is an increasingly complex landscape within the voluntary carbon market (VCM). A few key findings are below.

[Download your copy of State of the Voluntary Carbon Market 2024 here.]
In 2023, the volume and value of the VCM contracted for the second year in a row. The overall market transaction volume declined 56 percent from 2022-2023, and the total reported transaction value of the VCM was $723M USD. Disclosures from market participants indicate that negative media coverage and a pause in purchasing as buyers awaited guidance from integrity initiatives were key reasons for a pullback in buyer investment.
Different categories had distinct trajectories in terms of traded volumes and average price. The biggest gross declines in volume occurred among Forestry and Land Use and Renewable Energy credits, which remain the most popular project types. The volume of transactions in the Energy Efficiency, Agriculture, and Household/Community Devices carbon project categories all increased in 2023.
Within the Forestry and Land Use category, REDD+ credits, the most popular project type, lost 62 percent of their value year-over-year. Prices for Afforestation-Reforestation and Revegetation and Improved Forest Management credits both increased. 2023 saw a rash of negative media coverage of REDD+ which likely contributed to the decline. The pullback largely affected project developers in Asia, Latin America, and the Caribbean, where the majority of these projects are located.
The market share for projects delivering co-benefits for nature and communities continues to grow. Twenty-eight percent of transactions in 2023 supported projects with verified “beyond carbon” environmental and social co-benefits, such as preserving and restoring biodiversity, contributing to water security, or supporting sustainable local economies.


What is the ultimate objective of the market if concerns about integrity are addressed and we are no longer mired in discussions about whether a tonne is a tonne? If we can count on integrity, what then? David Antonioli proposes that we view carbon as a means to an end rather than the end itself, which can then free our mind to think about a bigger purpose. Read his commentary here.


Much of the discussion within the sector so far has treated large-scale jurisdictional REDD+ programs and smaller community-centered REDD+ projects as separate and incompatible. Joshua McCarron makes the case that the success of jurisdictional REDD+ will be built upon an accumulation of successful REDD+ projects. Read his opinion piece here.


Ecosystem Marketplace’s latest State of the Voluntary Carbon Market 2024 report details an increasingly complex landscape in the market, with some market segments showing growth as others fell. In this commentary, Calvin Tran breaks down the news and what it means for the future of the market. Read his commentary here.