A Path through Carbon Markets Turmoil

This executive summary from RMI argues that the voluntary carbon market (VCM) is currently in a state of transition, struggling with structural barriers related to data and process integrity. To fulfill its potential as a mechanism for climate finance and global decarbonization, the VCM must reduce subjectivity in credit-related data and streamline transaction processes through the integration of digital and web3 technologies.

• The voluntary carbon market (VCM) is described as a mechanism for private parties to trade carbon credits based on avoided, reduced, or removed greenhouse gas emissions. In 2022, the market facilitated approximately $2 billion in trades, but by 2023, it faced significant challenges regarding the delivery of reliable and accurate credits.
• The VCM's effectiveness depends on two interconnected pillars: data integrity (the accuracy of emissions and co-benefit data) and process integrity (the methods for developing, vetting, purchasing, and claiming credits). Current market struggles result from the interaction of flaws and gaps within these two pillars.
• Improving data integrity requires addressing four specific areas of subjectivity: measurement uncertainty of emissions impact, divergent interpretations of what constitutes a 'high-quality' credit, a lack of transparency regarding market pricing and transactions, and the absence of definitive metrics for equity and co-benefits.
• Digital and web3 technologies are identified as key tools for reducing transactional risks and improving data objectivity. Specifically, decentralized trading platforms, remote sensing, machine learning, and artificial intelligence can improve the traceability of credits, reduce transaction costs, and enhance how data is collected and stored.
• To create a high-performing VCM, RMI proposes four levers: reaching consensus on credit quality between supply and demand sides, integrating technological advancements into certification data value chains, ensuring independent and best-practice verification processes, and scaling a transparent governance model.

APA

RMI (2023). A Path through Carbon Markets Turmoil. https://rmi.org/resources/a-path-through-carbon-markets-turmoil/

Chicago

RMI. A Path through Carbon Markets Turmoil. 2023. https://rmi.org/resources/a-path-through-carbon-markets-turmoil/.

Wikipedia

{{cite report |author=RMI |title=A Path through Carbon Markets Turmoil |date=18 September 2023 |url=https://rmi.org/resources/a-path-through-carbon-markets-turmoil/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023path, author = {{RMI}}, title = {{A Path through Carbon Markets Turmoil}}, institution = {RMI}, year = {2023}, month = sep, url = {https://rmi.org/resources/a-path-through-carbon-markets-turmoil/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }