Op-ed: Carbon markets can help fill the climate finance gap. Here’s how we can unleash their potential
This op-ed was published in Reuters on July 28, 2025. You can read the full article here.
After growing strongly over five years from 2016, the voluntary carbon market shrank for the third consecutive year last year, weighed down by continuing concerns around quality and reputational risk, despite progress to improve integrity standards.
The downturn comes at a time when increased flows of new climate finance from the private sector are urgently needed, particularly with the Donald Trump administration pulling back its funding.
A series of studies have shown that carbon credit markets remain a powerful, underutilised mechanism for channelling private sector finance to climate change mitigation in many emerging markets and developing economies.
One suggests that the voluntary carbon market alone could grow to more than $50 billion by 2030, if companies begin investing more strategically today, and leverage impact of up to seven-fold.
This multiplier effect is all the more critical in closing the $1.3 trillion climate finance gap, especially as countries continue to scale up implementation of Article 6 under the Paris Agreement.
New market research from the Voluntary Carbon Markets Integrity Initiative (VCMI) found that despite concerns about quality, businesses still have strong appetite for engaging with carbon markets to support and accelerate their net zero commitments, in combination with efforts to decarbonise their operations and supply chains. Making progress on climate goals was the top-ranked opportunity that businesses see in carbon markets, based on a qualitative, in-depth research study involving more than 65 businesses.
The question now is: where do carbon markets go from here? While significant steps have already been taken to address quality and reputational concerns, three more key steps are needed to restore confidence and ensure carbon markets fulfil their potential to complement businesses’ efforts to decarbonise their value chains…