The Hidden State of the VCM.

A new report from Patch digs into the data to understand how global carbon buyers are responding to seismic political shifts and incentives that have evolved over longer periods of time. In their report, The Hidden State of the Voluntary Carbon Market, the team at Patch analyzed their proprietary platform data, public SBTi data, and data from major carbon credit registries to determine trends and guidance for corporate sustainability leaders looking to engage impactfully with carbon markets.

Here are a few of the key highlights on the state of the voluntary carbon market:

The new U.S. presidential administration has affected the VCM, but it’s not as bad as it could be. Global participation in the VCM has continued despite political turmoil. The report highlights a 6% increase in companies’ retiring credits observed in the six months post-election. However, there was a 17% drop in the total volume of credits retired, reflecting a shift in strategy, not disengagement. 

The report highlights four key reasons the VCM hasn’t significantly reacted: 

1. The digital and global nature of the VCM allows real-time, non-U.S.-bound transactions. 
2. Policies haven’t directly targeted carbon credit buyers. 
3. Companies act on longer timelines (2030, 2050) that extend beyond short-term political cycles. 
4. Corporate climate action is increasingly driven by internal strategies, regulations (e.g., EU), and reputational pressures, not just U.S. policy.

While companies have not shied away from actively participating in the VCM, they have begun to do so more quietly than in previous years. There’s been a noticeable rise in greenhushing, with 25% of companies reducing public communication of climate actions to avoid backlash. Reasons for this include reputation risk, regulatory scrutiny, and Europe’s Green Claims Directive and new disclosure laws, which have accelerated the shift to higher-integrity climate actions.

Corporate buyers are prioritizing certain project types for their investments.

When looking at current demand requests, 70% of buyers want portfolios that are at least 50% removals, with 44% wanting removal-only portfolios. Looking at the top projects by type, Biochar, Reforestation, Afforestation, Improved Forest Management (IFM), and Carbonated Materials top the list. When investigating potential portfolios, buyers requested engineered solutions like enhanced weathering and DAC 42% of the time, nature-based solutions 30% of the time, and asked for a hybrid of the two 28% of the time.

When you contrast requests to purchases, you can see the hidden supply crunch. Reforestation and afforestation represent 25% and 22% of requests, respectively, while only representing 12% and 5% of credit sales. These credits are generally less available on the spot market and are often pre-committed in multi-year offtake agreements. When not able to find a supply of ARR projects, buyers directed their investments towards IFM projects. 

There is increasing demand for long-term offtake agreements.

The report highlights that in the last two years, 50% of buyers have expressed an interest in multi-year pre-purchase agreements. Poised to be one of the most strategic tools for companies navigating the current supply-constrained carbon market, the voluntary carbon market is showing a growing preference for these types of agreements. A common agreement type in commodities purchases, multi-year, forward contracts benefit both project developers, giving them financial stability to scale, and for buyers, as it provides secure access to in-demand, high-integrity credits at predictable prices.

Invert Insights on the state of the voluntary carbon market

💡 The new U.S. administration has introduced disruption, but it has not caused a full retreat from climate action or the voluntary carbon market, at least not yet. The VCM remains robust, globally driven, and increasingly focused on quality and impact.

💡 Buyers want high-quality, removal-focused credits, but many are forced to settle for what’s available. Nature-based credits, particularly IFM and biochar, are seeing the most actual sales, while ARR projects remain in demand but scarce. 

💡 While it’s wise to be thoughtful when communicating corporate sustainability and climate action efforts, companies should still aim to communicate climate efforts, but do so clearly and transparently to mitigate fears of backlash. Working with a partner with a strong reputation who is transparent and knowledgeable is wise for companies just starting out. Ready to take that first step? Reach out and let’s chat.