By Bay St. Clair, Associate, Entoro Capital, LLC
In 2018 the voluntary carbon market transacted 98.4 million tonnes for $295.7 million. In 2024 it transacted 84.4 million tonnes for about $535 million.
Six years later, fewer tonnes were changing hands. The market had become more valuable, but it was still a fraction of the scale briefly reached during the 2021-2023 boom and nowhere near the growth once expected of it.
That is not a collapse. Collapses are dramatic, and they clear. This looks more like a flatline: years of new registries, ratings, monitoring tools and marketplaces without a durable expansion in traded volume.
The peak, and then the fall
The shape is familiar to anyone who has watched a technology cycle. Enthusiasm ran ahead of the infrastructure, the weaknesses became visible, and confidence fell faster than the underlying need for climate finance.
The market held just under $2 billion in value in 2022. Then came a sequence of credibility shocks. In January 2023, a Guardian, Die Zeit and SourceMaterial investigation concluded that more than 90 percent of the rainforest credits it examined under Verra were unlikely to represent genuine reductions – a finding Verra strongly disputed. Verra CEO David Antonioli announced his departure that May. In August 2024, the Integrity Council for the Voluntary Carbon Market rejected eight renewable-energy methodologies from its Core Carbon Principles label; those methodologies represented nearly a third of the voluntary market.
Two months later, Verra cancelled 5,004,915 overissued credits tied to projects developed by C-Quest Capital with the U.S. authorities bringing fraud charges for some CQC executives.
By then the stress was no longer confined to project methodologies. Running Tide, once backed by high-profile corporate buyers, shut down in 2024, and Nori closed later that year. The market had spent years building supply and infrastructure faster than dependable demand.
The flatline is a pricing problem
At the low end of the market, the problem became brutally simple: the credit could barely carry the cost of creating and moving it.
In March 2025, S&P Global Commodity Insights assessed Verra-certified renewable-energy credits at 55 to 60 cents a tonne, against developer break-even costs of roughly 50 to 60 cents. One developer reported bids as low as 25 to 30 cents. Verra fees included a 23-cent issuance levy, plus transfer and retirement charges. At those prices, transaction infrastructure can absorb an uncomfortable share of the economics before the project is paid.
Oversupply compounds the problem. Market analysis from Abatable found an issuance-to-retirement ratio averaging about 1.54 over five fiscal quarters.
Then there is the friction. A 2026 Ecosystem Marketplace and Carbon Capital Lab survey of developers and intermediaries found that spot sales took about five months on average and offtakes about fifteen, while two-thirds of sales conversations ended before formal project due diligence began.
Persistent oversupply of middling credits, thin pricing, and a months-long sales cycle are a poor foundation for project finance. Better methodologies can improve the asset. They do not, by themselves, create a buyer with an obligation to purchase it.
What did not die
That does not mean demand for environmental performance disappeared. The opposite case is important because it explains where the market is going.
Retirements have remained surprisingly resilient. MSCI counted 202 million tonnes retired in 2025, up 3 percent year over year and back at the prior record. Meanwhile, Sylvera found that first-half 2026 retirement volume fell 9 percent while retirement-market value rose; the average retired-credit price increased to $6.13 from $5.33 a year earlier. Buyers are not treating every tonne as interchangeable.
Corporate climate commitments are not disappearing either. In January 2026, the Science Based Targets initiative passed 10,000 companies with validated targets, representing more than 40 percent of global market capitalization.
AI may make that tension more visible, not less. Microsoft reported that its total emissions remained 23.4 percent above its 2020 baseline, in part because of AI and cloud expansion, while it had entered long-term agreements for nearly 30 million tonnes of carbon removal. In fiscal 2025 alone, Microsoft said it contracted another 45 million tonnes of removals. Data-centre growth is creating emissions pressure at some of the same companies willing to finance high-quality removal supply years in advance.
The market, then, is not short of climate ambition. It is repricing toward a narrower segment where quality can justify cost and where buyers are willing to commit before delivery.
The Bottom Line
The voluntary carbon market did not stall because environmental performance has no value. It stalled because the credit has proved a weak instrument for financing it.
The problem, is not the underlying asset. It is the financial architecture around it.
The next stage requires instruments that can operate within established financial-market frameworks, with defined ownership, contractual rights, standardized disclosure, regulated transfer and settlement, and balance-sheet eligibility to be eligible for most institutional buyers mandates.
Better methodologies may improve the credit. They do not solve the financing problem. Unlocking deeper capital, broader participation, liquidity and reliable pricing will require something more fundamental: a better financial instrument.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Entoro, LLC, or any of their respective affiliates. This article is provided for general informational and educational purposes only and does not constitute investment advice, a recommendation, an offer to sell, or a solicitation of an offer to buy any security, financial product, or investment strategy. The information presented is believed to be reliable but is not guaranteed as to its accuracy, completeness, or timeliness. Any forward-looking statements or opinions are subject to change without notice.
Author Bio: Bay St. Clair is an Associate at Entoro Capital, LLC, focused on structured finance, carbon markets, insurance, and renewable energy transactions. He supports financial modeling, due diligence, automation, and valuation work for climate finance and environmental asset securitization projects.
He plays a central role in expanding Entoro’s Natural Capital Securities platform and 1NatCap’s transaction infrastructure. He supports the origination, structuring, and execution of carbon and natural capital securitization projects through the development of Entoro’s automated processes for diligence frameworks, risk-assessment processes, and capital-markets systems required to move projects from initial evaluation through financing and commercialization.
Bay has supported Entoro Insurance Services by preparing research and presentation materials for various carbon credit insurance partnership initiatives. He also worked as a student consultant with CarMax, where he developed a financial and marketing strategy to enhance electric vehicle adoption.
He earned a Bachelor of Science in Commerce with concentrations in Finance and Management from the University of Virginia’s McIntire School of Commerce. He holds FINRA Series 3, 7, 24, 27, and 63 licenses and is a licensed Property and Casualty Insurance Agent in Texas.
