Carbon Markets: From Beauty to Duty
PART 1 · BITTEN ONCE (post 1-5)
1/38 · Oversupply or Underdemand?
"From Beauty to Duty" Series
At New York Climate Week in September, every other meeting I attended ended up raising the same question: how do we create demand? Or, put more bluntly, who is going to pay for all the emission reduction projects in the pipeline?
It puzzled me. We have an oversupply of carbon credits and an enormous pipeline of projects waiting for buyers, while at the same time every conference and every COP calls for more climate action and the "scaling" of climate solutions.
Over the next 37 posts I want to offer my very subjective diagnosis of the flaws and fallacies, and put forward ideas on how to overcome the barriers. All this from the perspective of a 25-year veteran of carbon markets, in the hope that my stubborn passion for this climate instrument will eventually help scale global GHG mitigation. It's time emitters trust and use results-based climate finance, and its KPI, carbon credits, to efficiently contribute to climate action.
The common answer to the demand dilemma goes roughly like this: buyers were spooked by stories about bad credits, so the integrity of credits has to get better. More conservative baselines, better measurement, another label, a rating on top - 𝘵𝘩𝘦𝘯 the buyers will come back.
Over the last years the market did exactly that. The ICVCM's Core Carbon Principles came into force, methodologies were tightened, rating agencies matured, cookstove baselines were cut to a fraction of what they used to be, satellite monitoring became ubiquitous, and registries, accounting and reporting all improved. Arguably, the supply side has made real progress.
But all of this is only worth as much as the reductions or removals it helps finance. The ultimate metric of success is whether we have less GHG in the atmosphere than the year before.
Alas, the buyers did not yet come back. AlliedOffsets data suggests 2026 retirements remain broadly flat relative to 2025. At the same time, SBTi reported a 227% surge in companies setting both near-term and net-zero targets in the 18 months to mid-2025. Companies are committing to climate targets faster than ever, yet one of the most efficient instruments that can catalyse finance for reductions today mostly stays on the shelf.
So there is a lot of head scratching going on.
In my view the diagnosis is right: integrity matters and the improvements were overdue. But as a solution it still falls short, and I dare to voice an uncomfortable suspicion: the buy side shows all signs of dealing with a trauma.
If this is so, we need to understand how trauma works, because merely explaining that "things have changed" does not help.