Trump Can’t Stop the Voluntary Carbon Market. Here’s What Can.
by Brennan Spellacy, Co-founder and CEO of Patch
It's easy to focus on the negatives in the current state of our fight against climate change. Global emissions continue their upward trajectory despite urgent warnings from the scientific community. COP29's climate finance pledges fell short of what experts say we need to address the crisis. In the United States, the incoming administration has signaled outright hostility to clean energy and climate action in general.
But even with these setbacks, there are a lot of reasons for optimism — particularly in the voluntary carbon market.
The momentum behind the market
It’s undeniable that federal policy over the next four years will affect the fight against climate change. But in the case of carbon markets, the momentum behind corporate action isn’t likely to diminish. That’s because significant subnational policies remain in place — including in California, the world’s fifth-largest economy. On top of that, the largest U.S.-based multinationals will continue to be subject to policy in the European Union, which will continue to drive more ambitious action in carbon markets.
Even if the incoming administration steps back from or tries to reverse the progress made in the last four years, the incentives put in place through the Bipartisan Infrastructure Deal and the Inflation Reduction Act have already pushed companies to invest in direct decarbonization efforts. This has led to widespread adoption of first-order solutions — updating travel policies, addressing food waste, purchasing clean power. But companies are now hitting a wall with the harder challenges: decarbonizing complex supply chains, industrial processes, and scope 3 emissions.
This is precisely why the voluntary carbon market is crucial. Based on my firsthand conversations with sustainability leaders, most companies are unlikely to walk back their 2030 climate commitments. As such, voluntary markets offer a vital pathway to meet these ambitious goals when direct emissions reductions prove technically or economically challenging — which they certainly would be given fewer federal incentives.
Voluntary action is impactful action
The power of the voluntary carbon market as a climate finance driver cannot be overstated. It represents a decentralized approach to unleashing market forces on climate change, capable of funding diverse solutions to help them go from innovative startups to gigatonne-scale projects. And it’s not pulling dollars away from emissions reduction — MSCI's research shows that companies buying carbon credits are decarbonizing at twice the rate of those that don't. This isn't just correlation; it demonstrates how carbon credits can serve as a bridge to deeper organizational transformations.
However, businesses still face massive hurdles that prevent them from taking voluntary action — and they’re currently keeping huge amounts of capital on the sidelines. If we want to continue and accelerate the momentum of the market, we have to overcome these obstacles.
How to unlock billions in carbon credit demand
Through our research at Patch, we've identified five critical phases where the voluntary carbon market loses momentum — each one acting as a bottleneck that prevents capital from flowing to crucial climate solutions.
It starts with strategy. The carbon market landscape is dizzyingly complex, with a maze of regulations, standards bodies, and certification systems that would challenge even the most seasoned experts. Yet our research shows that only 15% of top carbon credit buyers have dedicated carbon teams. The rest are navigating these waters in their spare time.
Then comes sourcing. Unlike traditional financial markets, there's no central exchange where buyers can easily find what they're looking for. Even sophisticated buyers often rely on their own research and institutional knowledge, while newer entrants depend on intermediaries who rarely have a complete view of available credits.
The diligence phase can often be the most daunting to resource-strapped teams. With carbon credits under intense scrutiny, buyers need to protect themselves from both reputational and financial risks. But a typical project portfolio requires 53 employee hours to evaluate, and companies regularly miss opportunities while completing their due diligence.
Purchasing itself presents its own complex choreography of legal, market, and technical expertise. As buyers move toward sophisticated multi-year offtake agreements, the lack of standardization across suppliers only compounds these challenges. Trust becomes paramount — suppliers must decide whether to hold inventory for buyers navigating these hurdles or move on to other opportunities.
Finally, there's management. Corporate sustainability leaders live in fear of headlines revealing integrity issues with their carbon projects. This fear of reputational damage, combined with increasing regulatory requirements like the EU's Corporate Sustainability Reporting Directive and California's AB 1305, creates yet another barrier to market participation.
These challenges aren't insurmountable. But understanding them is crucial if we want to unlock the full potential of carbon markets. The good news? We’ve got the means to build effective solutions for each phase, regardless of a particular regulatory regime. The question isn't whether we can solve these problems — it's how quickly we can do it at the scale needed for meaningful climate action.
The inflection point of the voluntary carbon market
We may be standing at an inflection point for the carbon market. Conventional wisdom suggests things look bleak — and yes, there are very real challenges that current geopolitics could exacerbate. But you never know you're at an inflection point while you're in the middle of it. A similar dynamic played out with solar, where government funding helped trigger investment that stoked demand, led to innovations that drove down costs, and ultimately the market took over. Now solar energy is the cheapest in the history of our planet.
The reality is that market forces are aligning in ways we haven't seen before. Companies have made commitments they can't achieve through direct reductions alone. They've exhausted the easy solutions. And they're facing increasing pressure from stakeholders to deliver on their climate promises.
When we look back at 2024, we might well recognize it as the year the voluntary carbon market began its true liftoff. Despite the challenging headlines, the fundamental drivers of market growth are stronger than ever. The question isn't whether the market will scale, but how quickly we can remove the friction holding it back.
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The only reason this climate nonsense is going on is the funding. When that stops some inertia will be in effect, but it will eventually stop, unless some of the actions morph into true value adding economic advantages.. but don’t hold your breath.