Despite some occasional overlaps, carbon markets, regulatory on one hand and the voluntary on the other, have historically operated quite distinctly. With the operationalization of Article 6 of the Paris Agreement, the authorization to use carbon credits from voluntary market standards to meet regulatory obligations, and attempts to regulate these previously unregulated instruments, the traditional boundaries are beginning to blur.
During a conference at Produrable 2025, Jessica Denoyelle (ClimateSeed - Head of Climate Contribution), Duncan Van Bergen (Calyx Global - Co-founder), and Clément Chenost (The Shared Wood Company - Co-founder & Managing Partner) analyzed this underlying trend: the challenges of integrity, investment opportunities, and strategies for market players to adopt.
The idea of synergy between the voluntary and regulatory carbon markets is not new, but it is gaining momentum. According to the World Bank, more bridges are being built between voluntary and regulatory frameworks, even though, in 2024, 76% of carbon credit retirements were on a voluntary basis. In fact, the share of regulatory-based carbon credit retirements strongly increased between 2023 and 2024, rising from 9% to 24%.
Historically, the markets for carbon credits were distinct, with specific supply sources matched to distinct demand sources. Independent credit mechanisms largely supplied voluntary buyers, while governmental and international credit mechanisms were primarily used by countries to meet their international commitments. As the graphic above shows, demand and supply sources in carbon markets today come from both governmental and independent origins. This convergence is stimulated by various dynamics:
These growing synergies are becoming concrete on the ground. For project developers, regulation has become a determining factor in rising demand. Clément from The Shared Wood Company, a project developer specializing in Nature-based Solutions, illustrates this trend with three concrete examples:
On the buyer side, regulatory uncertainty and public pressure have raised crucial questions. Duncan from Calyx Global, a company specializing in voluntary carbon credit assessments and ratings to improve the quality, transparency, and integrity of credits on the market, notes a sharp increase in customer inquiries about convergence.
On one hand, the eligibility and political risks associated with purchasing carbon credits are a concern. In a context where each country organizes its market differently, buyers seek to understand which credits are usable (typologies, standard, etc.) in which type of market (regulated and/or voluntary).
On the other hand, past controversies over the quality of voluntary credits raise fears that these weaknesses might be integrated into regulated systems. These concerns are illustrated by a growing demand to integrate attributes of regulated market credits, such as CORSIA eligibility, into the Calyx platform.
To avoid the pitfalls of the past, climate integrity is paramount. According to Duncan, it must be guaranteed at three levels:
Furthermore, to address these concerns, new frameworks are emerging, such as the Carbon Removal and Carbon Farming (CRCF) defined by the European Commission in December 2024. Its objective is to establish clear and reliable European rules for the quantification, monitoring, and verification of carbon removals, low-carbon farming, and carbon storage in products. Not only does this framework set a rigorous standard across the European Union to reassure buyers and guarantee the integrity of the carbon market, but it also creates new revenue opportunities for actors involved in carbon sequestration and low-carbon farming, as well as developing sequestration technologies and increasing the capacity of carbon sinks.
Moreover, following the example of the "UK Woodland Carbon Code", the European Commission is studying the possibility of integrating CRCF credits into the EU ETS regulatory market. Although the CRCF is a voluntary framework, its certificates, particularly those concerning permanent removals, could be accepted for regulatory compliance.
Despite the voluntary carbon market being sluggish for three years, large transactions are occurring at unprecedented prices. This paradox highlights two essential points:
On the demand side, more clients today want to maximize their options, with the possibility of using purchased carbon credits in both a voluntary and regulatory framework.
On the supply side, the challenge is to develop projects capable of generating credits that meet the requirements of both types of markets.
The question of a complete merger of the markets in the medium to long term, remains open. However, the issues related to the integrity of credits in these two segments must absolutely be resolved. The removal of the boundary between voluntary and regulated markets, without sufficient guarantees, would pose a major risk of integrating "ghost" credits into the regulated system with significant consequences, compromising the credibility of the market as a whole.
These concerns were recently underlined during the "Environment" Council on September 18, 2025, during which the European Commission considered the possibility of using international carbon credits starting from 2036, corresponding to 3% of the EU's net emissions in 1990, to achieve its climate targets for 2040, recalling the existence of these predominant risks.
However, the growing obligation to make information about purchased credits public encourages buyers to focus on quality and invest larger amounts to limit various integrity risks.
In conclusion, the speakers emphasized the importance of continuous action and integrity:
Sources:
European Commission. (n. d.). Carbon Removals and Carbon Farming.