The carbon market has been growing rapidly alongside the global carbon neutrality trend, but now it stands at a crossroads of change. Especially in 2023 & 2024, major fraud cases surrounding carbon credits significantly eroded market trust.

• High-profile scandals include the Kariba Project, the third-largest forestry offset project in the world, and clean cookstove distribution projects in developing countries, both of which were found to have significantly overissued carbon credits.

• Amid accusations of greenwashing against companies involved in these projects, instances of carbon credit cancellations and project suspensions have followed.

In response, both governments and private sector actors have begun discussing stronger regulations to improve the transparency and reliability of the voluntary carbon market. Simultaneously, global corporations are adjusting their strategies for using carbon credits.

• Shell, one of the largest carbon credit buyers, has shifted its strategy from bulk purchases of low-cost credits prioritizing cost efficiency to securing high-quality credits with strong market credibility.

• Microsoft is pursuing a strategy to secure high-quality, high-cost carbon credits based on innovative climate technologies, emphasizing investment in nurturing climate tech startups and building the market over immediate economic gains.

• Meanwhile, companies like Google and Volkswagen have shifted to limited & passive use of carbon credits, while three airlines including Delta have announced significant reductions or suspensions of credit purchases.

The diversification of corporate strategies reflects the significant uncertainty surrounding the carbon market. Perspectives on the growth potential of the voluntary carbon market over the next five years also diverge significantly.

• Forecasts for the voluntary carbon market in 2030 are trending downward recently, with major institutions projecting wide ranges from US$20 billion to over US$100 billion.

• The direction of change in the carbon market can be summarized as a shift from ‘quantitative growth’ to ‘qualitative growth’. In this process, the following are expected to become prominent: ▶ Strengthening standards and oversight for carbon credit quality, ▶ Expanding the trading of carbon removal credits, ▶ Growth in the insurance market.

2025 marks a critical turning point for the carbon market. Beyond cost-effective reductions through credit purchases, companies must focus on offset projects that simultaneously generate credible reduction achievements and business value from innovative climate technologies.

• Transparent disclosure of the quality of purchased carbon credits and their usage toward corporate climate goals is essential to prevent greenwashing.