Unlike the compliance market, which is driven by government-mandated carbon reduction regimes and operates on a ‘cap and trade’ model where industries have a set amount of 'allowances' to emit GHGs each year, the voluntary carbon marketplace (VCM) is open to anyone who wants to offset their emissions. This includes everyone from individual consumers to businesses – and in fact, the VCM is expected to grow far larger than the compliance market in the years to come.

But just because the VCM is unregulated, doesn't mean it can't be a robust and trustworthy tool to mobilize and channel funds towards the most impactful and cost-effective climate mitigation activities at speed and scale. A high-integrity VCM is essential to delivering on the ambitious "net zero" emissions goal that we all share.

There is incredible demand for the carbon credit market. According to a new study by the Taskforce on Scaling Voluntary Markets, there is projected to be 15-fold growth in VCM demand between today and 2050. This means that the VCM will increase from 0.1 to 1.5-2 GtCO2 of carbon credits per year by 2050.

This is good news for the climate sector - and it's even better news for farmers, ranchers, landowners, forest managers and other natural resource providers whose projects can generate a wide range of verified carbon offsets. The VCM is also a great opportunity for those who wish to demonstrate their environmental commitment in the workplace, or for individuals who want to offset their own carbon footprint.

The VCM is a diverse and dynamic market. The prices of carbon credits vary depending on the type of project and its location. For example, a forestry project that is near the source of emissions is likely to be more expensive than one located in a developing country. Additionally, the vintage of a carbon credit – that is, when it was generated – can influence its price. Older credits are typically priced lower than younger credits. The quality of the carbon project is another factor that influences price, including the level of co-benefits produced.

It's important to remember that the credit market is a supply-driven marketplace. As such, the quality of the projects that are certified as carbon credits is a primary driver of their price. This is why the credibility of the standards bodies that define carbon credits is so crucial. For this reason, a credible and transparent VCM is critical to establishing trust in the market.

A high-integrity VCM will be a critical complementary tool to support companies in their effort to reach net zero emissions by 2050. To achieve this goal, the global VCM must work to improve the quality of the credit supply and its certification. It will also need to ensure that the VCM is able to provide an efficient and reliable tool for companies to identify the most appropriate carbon offsets for their unique circumstances. To make this happen, the VCM must continue to develop a credible and robust framework of verification based on Earth observation.