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How the voluntary carbon market accelerates global decarbonization

Several independent studies conducted in the last two years show that companies that buy and retire carbon credits toward their climate goals also decarbonize their own supply chains and operations more quickly than companies not participating. Read More

(Updated on October 28, 2024)
An abstract image of charts and graphs and renewable energy projects.
The voluntary carbon market is helping to close some of the more than $4 trillion funding gap for climate finance. Source: vectorfusionart via Shutterstock

The voluntary carbon market does more than mitigate present-day emissions —  it lays the foundation for the systems we’ll need for global climate action at scale in the decades to come. 

Here are three ways the voluntary carbon market is accelerating global climate progress: 

Transition finance

The voluntary carbon market can help to close some of the more than $4 trillion climate finance gap, covering the costs of early-stage deployment of climate solutions until they become the new business as usual. Not only does carbon finance deliver much-needed funds to climate projects, but an active carbon market also demonstrates demand for carbon credits, unlocking additional early-stage finance to get more projects off the ground. 

A photograph from the Verge conference

Infrastructure for compliance systems

We already see some countries, like Colombia and Singapore, adopting systems developed by the voluntary carbon market into their compliance carbon markets. 

Similarly, the voluntary carbon market is now supplying infrastructure to two United Nations-backed climate action programs. CORSIA (carbon offsetting and reduction scheme for international aviation) is a market-based mechanism for reducing the climate impact of international aviation; airlines in participating countries can purchase carbon credits from the VCM that satisfy the program’s criteria to meet CORSIA obligations. In addition, several project registries that have grown up with the voluntary carbon market are now listing the first credits aligned with Article 6 of the UN’s Paris Agreement, designed to enable greater global cooperation toward climate targets. 

Accelerating decarbonization

Several independent studies conducted in the last two years show that companies that buy and retire carbon credits toward their climate goals also decarbonize their own supply chains and operations more quickly than companies not participating in carbon markets. While it’s difficult to distinguish correlation and causation in this research, it is clear that purchasing carbon credits puts an implicit price on carbon. That price brings transparency to corporate climate strategies and ties climate impact to the company bottom line, putting downward pressure on emissions. 

The broader impacts of the voluntary carbon market will form a core element of our VERGE24 carbon program this year. We’ve crafted a series of sessions with top thinkers on how carbon markets form part of the broader push toward global decarbonization. I look forward to exchanging ideas with many of you in person at VERGE next week.

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