Political sector presents potential gains for decarbonisation sector
Voluntary Carbon Market Evolves Towards Higher Integrity in Germany and the U.S.
The voluntary carbon market (VCM) is undergoing significant changes, focusing on increasing integrity, digitalization, and stricter standards, particularly impacting negative emissions projects in both Germany and the United States.
Current State
The VCM is adopting the Core Carbon Principles (CCPs) to ensure credit quality and build trust among buyers. This is crucial for negative emissions projects that must demonstrate permanence, additionality, and measurable ecosystem co-benefits. In the United States, regulatory developments such as federal and state climate orders, and voluntary programs, are shaping the market. In Germany, the VCM interacts with EU climate targets and regulatory initiatives, emphasizing high-integrity nature-based projects like forest and soil carbon sequestration.
The price dynamics reflect this focus on quality. Nature-based removal credits generally trade between $7 and $24 per ton CO₂e, while technology-based carbon dioxide removal (CDR) credits can exceed $170 to $500 per ton. Both markets face liquidity and supply challenges, with engineered CDR supply unlikely to meet demand without significant technological and financial breakthroughs.
Future Outlook
The VCM is forecasted to grow steadily, potentially reaching around $40 billion by 2040, driven by rising corporate commitments to offset emissions and negative emissions becoming a core part of net-zero strategies. Demand for carbon removal credits is expected to increase rapidly, particularly for high-integrity engineered carbon removals and premium nature-based projects.
Digital innovation and regulatory frameworks will be crucial to scaling trust and market liquidity over the next decade. The introduction of tokenization and digital registries aims to improve liquidity, transparency, and interoperability across voluntary markets in both countries, reducing fraud risks. Ongoing regulatory shifts, including tighter standards and enforcement mechanisms, are expected to further enhance market confidence but also limit supply to projects that meet stringent integrity requirements.
Magnus Drewelies and Ceezer
Magnus Drewelies, the founder and CEO of the CO2 certificate platform Ceezer, is at the forefront of these changes. Drewelies, who has been interested in climate topics since his studies, wanted to work at the intersection of business and chemistry, quickly coming to cleantech. He founded the German Association for Negative Emissions (DVNE) in 2023 with around a dozen like-minded people. Ceezer, which employs over 60 people and raised around 10 million euros in a Series A funding round last year, aims to address skepticism by offering transparency and up to 500 data points for each project.
Ceezer's CEO previously worked at the consulting firm BCG and as Chief Strategy Officer at Park Now, a mobility joint venture of BMW and Daimler. The platform allows companies to acquire and manage projects for their CO2 portfolios, with the scientific advisory board ensuring that the projects meet the current state of research. Under the new government, there are signals that the topic of decarbonization will continue to be pursued, providing a positive outlook for businesses like Ceezer.
Conclusion
The VCM in both Germany and the U.S. is maturing towards higher integrity and transparency, with strong demand for negative emissions credits from both nature-based and technology-driven projects. Supply constraints, especially for engineered negative emissions, are likely to persist, pushing prices higher and focusing investment on high-quality projects. Digital innovation and regulatory frameworks will be crucial to scaling trust and market liquidity over the next decade, making voluntary carbon markets a key mechanism for meeting climate targets in these countries by 2040.
- As the voluntary carbon market (VCM) evolves towards higher integrity, environmental science plays a significant role in evaluating the permanence, additionality, and co-benefits of negative emissions projects, particularly in forest and soil carbon sequestration.
- Finance and investing become increasingly important in the VCM, as companies seek to offset their emissions and negative emissions emerge as a core component of net-zero strategies; the market is anticipated to grow to around $40 billion by 2040.
- Technology will be crucial in addressing supply challenges within the VCM, as technological breakthroughs are needed to meet growing demand for high-integrity engineered carbon removals, boosting the prospects for ventures like Magnus Drewelies' CO2 certificate platform Ceezer.
