When companies want to “cancel out” some of their greenhouse-gas emissions, they buy carbon credits—certificates showing that one tonne of CO₂ has been avoided or removed somewhere else. Most of these trade in the voluntary carbon market, where participation is by choice rather than by law. That market has plunged in value from about US $2.1 billion in 2021 to just US $535 million in 2024. Buyers lost faith after scandals showed some projects exaggerated or even invented their benefits, and today only around 5 per cent of credits represent genuine carbon removal, which now costs about US $350 a tonne compared with roughly US $4 for standard “avoidance” credits.
Last week at London Climate Action Week, Kenya, Singapore and the UK launched the Coalition to Grow Carbon Markets. Their goal is to issue a shared rule-book for carbon projects and to guarantee that any credit meeting those rules will be accepted under future domestic carbon-pricing schemes in each country. Their bet is that clear government backing can rebuild trust and draw money back to high-quality projects.
A key challenge today is the patchwork of quality standards. Every country—or private standard-setter—runs its own monitoring, reporting and verification process (MRV). Buyers worry that a credit deemed valid in one scheme might be rejected in another. The coalition’s “regulatory passport” aims to solve this: a credit approved in Nairobi would carry the same guarantee as one stamped in Singapore, cutting legal fees and due-diligence time.
The second promise is a demand anchor. Right now, voluntary credits have no assured value in government trading schemes. The coalition pledges that qualifying credits will be usable to meet part of any future carbon tax or emissions-trading obligation in Kenya, Singapore or the UK. This commitment acts like a price floor: if companies trust the promise, they’ll pay more for good credits today because they expect to redeem them tomorrow.
None of this works without credibility. If governments fail to police poor projects or change the rules midway, confidence will evaporate again. Recent land-rights disputes in Kenya over forestry offsets and warnings from climate-justice groups about cheap low-quality credits highlight the risks. If lax rules prevail, poor-quality credits could flood the market and actually increase global emissions instead of reducing them.
Yet the upside is huge. A trusted voluntary market could channel hundreds of billions of dollars into clean energy, reforestation and carbon-removal technologies—sums far beyond what aid budgets or development banks can provide. In effect, a strong government seal could bridge the gap between ambitious climate targets and the cash needed to reach them.
Conclusion
Carbon markets live or die on trust. Kenya, Singapore and the UK are betting that a clear set of public rules—and a guarantee that good credits will count under future climate laws—can restore that trust. If they follow through with rigorous monitoring, transparent data and real penalties for cheats, the coalition could supply the stable price signal the voluntary market has lacked. If they don’t, buyers will stay on the sidelines, and hopes of leveraging private finance as a climate-action engine will once again feel like wishful thinking.
For anyone new to carbon markets, the lesson is simple: a carbon credit only matters if people believe in the story behind it—and governments may now need to be the storytellers the market relies upon.