First Government-Led Alliance for Voluntary Carbon Markets

The Coalition to Grow Carbon Markets, a pioneering government-led initiative, has been inaugurated by the governments of Singapore, the United Kingdom, and Kenya. Its primary objective is to foster increased corporate engagement in voluntary carbon markets.

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This partnership seeks to enhance market confidence and motivate companies to invest in decarbonization by establishing consistent, high-integrity standards for carbon credits among its member nations.

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A coalition has been formed to highlight the importance of a well-functioning carbon market in achieving global climate goals. This market, the coalition stresses, is crucial for unlocking vital funding for sustainable decarbonization in emerging and developing economies.

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Future financing efforts will target four key areas:

• Accelerating global emissions reductions
• Restoring nature
• Reducing pollution
• Generating lasting co-benefits for local ecosystems and communities

The Voluntary Carbon Markets Integrity Initiative (VCMI) will act as the coalition's secretariat. Alongside the three founding countries, France and Panama have joined as inaugural members, with Peru also expressing its support. The coalition is actively encouraging more governments to join, aiming to enhance carbon credit quality and mitigate greenwashing risks.

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Ravi Menon, Singapore’s climate ambassador and a co-chair of the coalition, acknowledged the prevailing lack of trust in carbon markets. However, he argued against abandoning the system, stating, “It is not the tool that is at fault, but the way it has been used. There are demand, supply and market infrastructure issues that we need to address.”

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A coalition plans to unveil unified, high-quality carbon credit standards at COP30 this November. These standards are designed to streamline cross-border carbon transactions by reducing regulatory fragmentation, thereby enabling businesses to trade with increased confidence. This initiative also aims to catalyze climate investments and bridge the $1.3 trillion climate finance gap.

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The coalition projects that stronger demand for high-integrity credits could expand the voluntary carbon market to an estimated $250 billion by 2050.

Despite ongoing reform efforts, trust in the voluntary carbon market remains fragile. A 2024 study revealed that none of 43 major global offset programs met their emissions reduction targets, prompting concerns about the accountability of registries and verification bodies. These findings highlight the critical need for reform, with countries like Singapore and Japan already implementing new regulations to restore credibility to the carbon credit system.