From credibility to demand: what buyers need before they scale procurement again
Demand is not bouncing back just because integrity is improving. The voluntary carbon market saw a sharp drop in traded volume and value after the 2021 peak, with research on broker and trader data pointing to roughly 111 MtCO₂e traded in 2023 versus 516 MtCO₂e in 2021. That collapse triggered a procurement freeze across many large buyers, and it still shapes how deals get done.
Procurement is moving from spot buying to forward and offtake structures. Buyers still have budgets, but they want quality, delivery, and reputational risk clauses before they commit. That shift is less about price and more about internal permissioning: legal, compliance, and communications teams now sit closer to the decision.
The core buyer question is simple: what can we claim without greenwashing? That is why the VCMI Claims Code of Practice and related guidance matter in practice. Buyers increasingly need governance artifacts that stand up to scrutiny, including audit trail, disclosure discipline, and clear evidence of retirement, before procurement can scale beyond pilots.
Portfolios are replacing “tonnes” as the unit of decision. Buyers are mixing removals and avoidance, weighing durability and reversal buffers on one side, and additionality and baseline credibility on the other. Independent ratings and more transparent MRV are becoming common filters, but they also raise due diligence costs and lengthen buying cycles.
Contractual safeguards are now part of the product. Buyers are asking for representations and warranties on baseline setting and additionality, reputational indemnities, and replacement mechanics if credits are downgraded or contested. Technical data rooms are becoming normal, with monitoring reports, shapefiles, leakage treatment, and uncertainty disclosures expected upfront.
Standardised “labels” are the missing bridge between credibility and demand. Even when the credibility layer improves, buyers still need comparable operational standards so they can defend paying different prices for different integrity tiers. That takes us directly to how integrity standards are changing supply and issuance.
New integrity standards in practice: how baselines, additionality, and monitoring are reshaping supply
Standardised signals are becoming more real, but they are not yet pervasive. The ICVCM is operationalising the Core Carbon Principles through an assessment framework and approvals for programs and methodologies, with labelling and tagging intended to make quality more legible.
Coverage is still early relative to the market’s total flow. ICVCM reports around 51 million credits associated with CCP-approved methodologies, about 4% of 2024 volume, with a larger pipeline that has not fully converted into issuance. That gap matters because buyers cannot procure what is not issued, labelled, and easy to diligence.
Baseline tightening is where supply feels the squeeze first. In REDD+, Verra’s transition toward more consolidated approaches such as VM0048 is explicitly designed to reduce over-crediting through more structured methods, including risk maps, use of official data, and stronger engagement with governments. The trade-off is predictable: implementation takes time, and issuance can fall as crediting becomes more conservative.
Additionality tests are also getting harder to “pass” in sensitive categories. Clean cooking is a good example of how CCP-related conditions can make large parts of historical supply effectively ineligible, even when a methodology is recognised. That pushes value toward new vintages with tighter MRV, and it creates stranded inventory risk for developers and traders holding older credits.
Monitoring expectations are rising across categories. Conservative crediting, uncertainty deductions, leakage treatment, and reversal risk buffers are moving from technical footnotes to commercial terms. Buyers increasingly ask for packages like “CCP tag plus rating A or B plus an evidence pack,” and they want clarity on double counting risk and, where relevant, corresponding adjustments under Article 6.
Higher MRV costs and more selective issuance should, in theory, support stable price premia. The market is not behaving that cleanly, which is why the current phase feels like a reset rather than a simple upgrade cycle.
The pricing reset: why higher-quality credits are not clearing at a premium consistently
Thin liquidity is making price discovery fragile. Ecosystem Marketplace describes a market in transition, with low liquidity and a focus on quality, and notes that 2024 volumes were among the lowest since 2018, following steep declines in 2023. In that environment, a small number of trades can move benchmarks, and spreads can look noisy rather than structural.
Quality signals do not automatically translate into clearing premia because the market is pricing risk, not just integrity. Delivery risk matters when issuance timelines are uncertain. Reputational optionality matters when a credit can be downgraded or publicly contested after purchase. Comparability is still imperfect because labels and ratings do not cover the full universe, and they often arrive after a project has already been financed and structured.
Premia are showing up in pockets, not across the board. Ecosystem Marketplace reports examples where ICVCM-related approvals coincided with higher prices and volumes for specific types, such as landfill gas in the second half of 2024, where average prices rose and volumes increased versus the first half. Those moves look more like islands of conviction than a market-wide repricing.
Buyers keep asking a practical question: why pay more if we cannot prove the integrity delta internally? The honest answer is that the market still lacks robust benchmarks by integrity tier, reliable forward curves, and standard contract language that maps quality specs consistently across brokers, exchanges, registries, and rating providers.
This pricing reset exposes a plumbing problem. If the infrastructure cannot carry quality information and settlement processes cleanly, the market cannot scale volume without reintroducing reputational risk.
Liquidity and market plumbing: registries, ratings, exchanges, and the bottlenecks slowing acceleration
Fragmentation is still the default operating condition. Registries, rating providers, and trading venues each have their own data models and processes, and that makes it hard to build standardised “claims-ready” products that can trade with depth.
CCP labelling helps, but it is not yet a market-wide layer. With only a small share of recent volumes tied to CCP-approved methodologies, desks still manage mixed-quality inventory across vintages, with heavier screening and more exceptions. That raises transaction costs and reduces turnover, which further weakens liquidity.
Data is still not as usable as buyers need it to be. MRV documentation is often not machine-readable. Registry timelines for issuance, retirement, and project updates are not uniform. Ratings can drift through upgrades or downgrades without a standard remediation mechanism that automatically triggers replacements or price adjustments.
Portfolio management is harder than it should be. Buyers pursuing SBTi-aligned strategies often want netting and optimisation across a portfolio, but inconsistent metadata and quality definitions make that difficult to do in a way that is auditable.
Compliance-adjacent demand raises the bar further. In aviation, CORSIA eligibility comes with specific conditions, including attention to double counting and documentation expectations that can resemble Article 6-style constraints. S&P Global highlights mixed price sentiment for CORSIA Phase 1 amid thin supply, which reinforces a simple buyer heuristic: if it is eligible or defensible under stricter rule sets, it is easier to buy.
Slow infrastructure shifts costs onto developers. When registries, verification cycles, and quality gating extend timelines, developers carry more working capital needs and more delivery risk, which changes how projects must be financed.
What developers must change now: project finance, MRV costs, and delivery risk under tighter rules
Financing has to be built around verification and delivery milestones. In a low-liquidity market with quality gating, developers increasingly need forward offtake structures, pre-financing tied to MRV milestones, escrow mechanics, and covenants linked to integrity requirements. Buyers and financiers are pricing the risk that credits do not arrive, or arrive with a weaker quality profile than expected.
MRV upgrades should be treated as a core cost line, not a nice-to-have. More metering, remote sensing, more frequent checks, stronger QA/QC, and a cleaner audit trail raise capex and opex, especially in AFOLU and clean cooking. The operational trade-off is clear: fewer credits may be issued under conservative rules, but the credits that do issue can be more bankable.
Delivery risk needs explicit term-sheet engineering. Replacement credit clauses, vintage constraints, and triggers tied to eligibility changes are becoming standard asks. Developers also need to disclose uncertainty deductions and leakage assumptions early, because surprises late in the process now kill deals.
The product needs to be specified like a commodity with quality grades, even if it is not fully commoditised yet. A credible pathway might include “CCP-ready” method selection, a target rating band, and a buyer-ready evidence pack that supports claims without over-claiming. Alignment with VCMI-style claims governance is often what unlocks internal approval for repeat procurement.
Lower development costs do not automatically mean lower market prices. Tools that reduce documentation and monitoring effort, including AI-enabled workflows, can compress developer costs, but the market price is still dominated by liquidity, risk premia, and buyer governance constraints. In practice, cost savings often stabilise project economics rather than flowing through to buyers as cheaper credits.
After delivery and integrity risk are reduced, the remaining question is macro: how quickly can demand return, and what shape will the recovery take?
12–24 month outlook: scenarios for recovery, consolidation, and the split between avoidance and removals
Stabilisation is the most plausible base case. Ecosystem Marketplace frames the VCM as in transition, with low volumes, repricing, and quality selection. Over the next 12 to 24 months, a gradual recovery looks more likely to be driven by higher-integrity supply becoming easier to identify and contract, rather than a return to 2021-style volumes.
A two-speed market is also plausible. Avoidance credits face more pressure from baseline tightening and additionality scrutiny, and prices can stay compressed when claim clarity is weak. Removals can command higher willingness to pay, but only where MRV, durability, and capacity constraints are addressed. S&P Global’s view that demand for avoidance credits in 2025 could remain muted is a useful sentiment signal for how 2026 could still feel uneven, even if it is not a precise forecast.
Compliance-adjacent pockets may tighten faster than the broader VCM. For CORSIA Phase 1, eligibility and documentation requirements can create a sub-market where pricing is more sensitive to rule interpretation and supply availability. Some analyses cited by S&P Global suggest demand and supply may not fully align until later in the decade, which can still influence forward contracting behaviour now as buyers try to secure eligible inventory.
Consolidation should accelerate if plumbing remains a constraint. Partnerships and M&A across developers, MRV tech, ratings, and capital providers are a rational response to high transaction costs and fragmented data. The buyer-side implication is positive if it leads to more standard contract specs and better benchmarks by integrity tier, which is what would make premia more consistent.
Execution will matter more than predictions. A practical 12 to 24 month checklist for buyers, developers, and investors looks like this: (1) procurement policy and claims readiness aligned with VCMI-style governance, (2) portfolio guardrails on durability, reversal risk, and corresponding adjustments where required, (3) offtake contracts with delivery protection and downgrade remediation, (4) data infrastructure that supports audit and reporting, (5) active monitoring of CCP coverage and methodology updates such as VM0048 rollout.
