Looking back at the journey of the voluntary carbon market (VCM) feels like watching a documentary on how “voluntary climate action gradually became a global consensus.” This is not just a story about frameworks and trading mechanisms, but about the interplay of ideas, institutions, and real-world projects. What began as a handful of companies experimenting with offsetting their emissions has grown into a global marketplace where businesses, governments, and NGOs collectively pursue high-quality credits and credibility. Every step in this evolution has been shaped by a deepening understanding of the climate crisis and a shift in how the world chooses to act.
Compliance vs. Voluntary Carbon Markets
Before diving into the evolution of the VCM, it’s worth outlining the broader carbon market landscape. Broadly speaking, there are two types: compliance markets and voluntary markets.
Compliance carbon markets are established by governments or international regulatory bodies to serve industries that are legally required to reduce emissions, typically including energy, cement, and petrochemical sectors, with trading conducted through emission allowances. Voluntary carbon markets, by contrast, are driven by companies and individuals who voluntarily purchase carbon credits to offset their emissions.
While the two markets differ in purpose and design, they interact and complement each other in meaningful ways, shaping the voluntary carbon market into the ecosystem we see today.
Three Phases of VCM Development
According to Verra and the International Carbon Reduction and Offset Alliance (ICROA), the evolution of the VCM can be broadly divided into three phases:
- 1990–2007: Early Formation and Innovation
- 2008–2016: Consolidation and Strengthening
- 2017–present: Mainstreaming
Each stage reflects the world’s growing awareness of climate change and has helped shape today’s market mechanisms and frameworks.
Planting the Seeds: The Birth of Carbon Offsetting
The story begins in the late 1980s and early 1990s, when environmental issues like acid rain, ozone depletion, and greenhouse gas emissions dominated headlines. During this period, the concept of “carbon offsetting” started to take shape: supporting emission reduction activities elsewhere to balance one’s own footprint.
One of the earliest experiments came from U.S. utility company Applied Energy Services (AES). Guided by the World Resources Institute (WRI), AES launched a reforestation project in Guatemala to offset emissions from its coal-fired power plants. Dr. Mark Trexler, who was involved at the time, later explained that WRI saw this as a “temporary measure” before formal regulation was in place—essentially a way to encourage businesses to take carbon emissions seriously.
What began as an interim measure ended up as a milestone. This initiative not only marked the birth of offset projects but also laid the groundwork for carbon trading as a viable climate solution.
Early Standards and Market Frameworks
Momentum accelerated after the Kyoto Protocol came into force in 2005. Its Clean Development Mechanism (CDM) issued the world’s first Certified Emission Reductions (CERs), formally launching the compliance carbon market.
Inspired by the CDM, businesses outside compliance markets began exploring voluntary action. This shift in mindset sparked the emergence of independent standards tailored for voluntary carbon markets. By the mid-2000s, four major VCM standards had been established:
- American Carbon Registry (ACR)
- Verified Carbon Standard (VCS) by Verra
- Gold Standard (GS)
- Climate Action Reserve (CAR)
Each of these standards provided methodologies, validation processes, and safeguards to ensure environmental integrity. Together, they laid the institutional foundation for today’s VCM and remain among the most widely used frameworks worldwide.
Though the early VCM was still experimental, it established the market’s core logic and credibility. This foundation would soon pave the way for more robust mechanisms, broader participation, and stronger alignment with global goals like the UN’s Sustainable Development Goals (SDGs).
In the next phase, the VCM would move from experimentation to consolidation—building best practices, expanding geographically, and bringing the private sector into the heart of climate action.
Reference: Verra , Carbon Offset Guide , Carbon Brief , TCX | 碳學堂