The voluntary carbon market faces a crisis: cheap credits devalue impact and distort incentives. Despite the social cost of carbon sitting at $180–$190 per ton, many voluntary credits trade for as little as $1.64. This isn't just a pricing failure, it's an impact failure. Worse, it sends the wrong message: that cheap credits with dubious or opaque claims are acceptable, even though they fail to drive real climate action.

The myth that all buyers only want cheap credits has already been disproven.  There has been an established willingness for companies to pay $500–$1,000 per credit for projects they genuinely trust that bring lower risk and can be claimed appropriately. This is actively happening through forward purchasing agreements for Direct Air Capture (DAC), Carbon Capture, Utilization, and Storage (CCUS), and Bioenergy with Carbon Capture and Storage (BECCS), among others. Microsoft and Stripe, for instance, purchase high-priced credits from these projects because they are tangible, scientifically verifiable, and align with long-term environmental and carbon removal goals.

This massive difference between $2 credits from poorly verified projects and the $1000+ range for high-quality engineered ones reveals a deeply broken market—one that can’t effectively guide climate finance where it matters most.

The Gold Coast Example: Value vs. Price

There is an incredible demand for sustainable infrastructure in the rapidly evolving market of West Africa. It offers a clear example of the voluntary market’s failure to value impact. There are hundreds of critical infrastructure projects remaining on hold, which could reduce emissions while supporting sustainable growth and drive economic development in the region. The problem is financial. Voluntary credit prices for the scale of impact create a barrier for facilities to receive funding, as the prices don’t achieve a substantial enough margin over the cost of verification, certification, and issuance. This makes these projects uneconomical to even get off the ground, let alone scale to the millions of tons of annual impact they’d make. Developers are told to wait for the market to improve, but 2030 targets demand action now. In lieu of strong financial support from carbon markets, these projects will likely be implemented without the appropriate sustainable infrastructure to mitigate their emissions. 

Dr. Yemi Katerere, the Chair of the Advisory Board for the Institute of Natural Resources in Africa of the United Nations University, stated, “African governments have always complained about low carbon prices and the domination of the carbon value chain by actors from developed countries… When we talk about carbon markets, we create expectations of significant revenue, but many challenges could undermine their effectiveness.” The mismatch between market price and real project value obstructs environmental, social, and economic benefits. Ironically, the voluntary market is supposed to incentivize this type of climate solution, but here, instead, it discourages it, telling developers of impactful projects they may never see a return on investment. Without systemic structural reforms, this becomes a race to the bottom.

Additionality and its shortfalls: Ignoring Nature’s Intrinsic Value

In addition to the complexities already mentioned, the market’s fixation on “additionality”—the idea that credits are valid only if the project’s climate benefits wouldn’t have happened otherwise—further reduces incentives. At face value, additionality is supposed to ensure that carbon credits represent real emissions reductions and reduce the risk of double incentives or double counting a project's impact. In practice, it can limit the ability of ecosystems and communities that have maintained their lands and penalize nature for simply existing in a healthy state.

• Intrinsic ecosystem services: Forests and wetlands sequester carbon (and methane) irrespective of whether they are on the brink of deforestation or threatened by a specific human activity. Yet, additionality demands proving a credible threat before rewarding these systems for the climate benefits they already provide.
• Global inequities: Wealthy nations and organizations often set the benchmarks for what constitutes a “real threat,” while countries with limited means to prove that threat lose out on vital climate finance. This is especially detrimental for nations rich in natural capital, such as tropical forests, peatlands, and marine ecosystems, which have the highest potential for climate solutions yet remain underfunded.

The Problem: A Disconnected Value Chain

In principle, carbon markets should reward all significant climate benefits, whether they’re in the form of high-tech removal projects or the faithful stewardship of existing ecosystems. However, when cheap credits flood the market at $1–$2, the emphasis shifts from verified impact to the illusion of “low-cost offsets.” Meanwhile, the principle of additionality locks entire regions out of funding unless they can prove their ecosystems are under threat. Together, these flaws undermine the very solutions the world needs.

Pockets of Success: Proof and Price Alignment

Not all is doom and gloom. Where good data is collected consistently, measurements are qualitative and quantitative, verification is robust, permanence is measurable, and the co-benefits are clear, buyers pay premiums. Strategic areas where measurable outcomes are already driving market premiums. As of early 2025, carbon credit prices vary significantly based on the type of project, quality, and market demand. High-durability carbon dioxide removal (CDR) credits, such as those from direct air capture and biochar projects, command premium prices, ranging between $100 and $600 per ton. Biochar credits, in particular, have been reported to trade between $200 and $1,200 per ton, reflecting their high demand and limited supply^, . 

These success stories show that the market can value real, verified impact, provided mechanisms exist to measure and monetize it fairly. 

The Fix: A Prove-It Economy Requires Structural Change

The market is currently entering a highly disruptive transitional phase. To come out of this phase, it needs to realize itself as a “Prove-It Economy,” one in which outcomes dictate price. For the voluntary market to incentivize meaningful action, several reforms are essential:

1. Raise the Price Floor: Credits must align better with the social cost of carbon ($180–$190). This will push developers and financiers to focus on projects with demonstrable impact rather than perpetuating the $2-5 status quo. Bringing the Voluntary Market to parity with Regulated Carbon Markets would be a strong first step. 
2. Price Premiums for Digital MRV (Monitoring, Reporting, and Verification): Real-time, granular MRV systems can remove guesswork and greenwashing, linking payment directly to proven outcomes. Verified nature-based solutions and high-tech removals benefit from transparent data that garners trust, which can result in higher prices.
3. Establish Impact-Based Tiers: Reward high-impact projects with premium pricing, incentivizing developers worldwide to aim for verifiable outcomes. This includes high-tech solutions but should equally value ecosystems that provide measurable and ongoing climate services. If a project supports multiple positive impact measures, the pricing for that should be transparently relayed and supported by buyers. Many projects impact carbon, methane, air quality, biodiversity, economic status, and community in tandem. Carbon oversimplifies that, and the extra work should generate extra reward. 
4. Reward Early-Stage High-Impact Projects: Frontier (aka First-Of-A-Kind / FOAK) technologies and cutting-edge nature-based solutions deserve a premium that accelerates their path to scale. At the same time, ecosystems providing essential services for forests, peatlands, marine systems, and more should receive predictable revenue for the carbon (and methane) they continually sequester.
5. Move Beyond Additionality: Compensate nature for the indispensable services it already provides, not just for the threat of losing those services. Doing so encourages proactive conservation, addresses global inequities, and realigns carbon finance with fairness and long-term sustainability.

The Opportunity: A Market Built on Proof, Not Promises

Cheap carbon credits undermine genuine impact, and additionality fails to recognize ecosystems' indispensable, ongoing services. Both flaws are the fault of a system focused on cutting costs and checking boxes rather than on actually solving the climate crisis. 

The voluntary market should no longer be a clearance rack for cheap offsets, but a proving ground for impact. Companies have already shown a willingness to pay a premium for trusted outcomes. Now, the market must rise to meet that demand.

The race to 2030 leaves no room for a market driven by volume over value. Projects like those in Senegal illustrate the cost of inaction. The future of the voluntary carbon market must be a Prove-It Economy. One where outcomes dictate price and price scales impact. In this market, proof isn’t optional.

A reinvented voluntary market, grounded in transparent and trustworthy data and free of misaligned incentive models, can transform climate finance into a genuine driver of change. It can ensure that corporations paying top dollar for frontier technologies aren’t outliers but part of a broader ecosystem where carbon credits command prices that reflect their real-world impact. For nature-based solutions, such a market would mean predictable revenue for the ecosystems actively sustaining life on Earth.

A regenerative carbon market must reward verifiable, high-impact solutions; it must free ecosystems from the need to prove an imminent threat to receive compensation. By doing so, we can build a market prioritizing proof over promises, quality over quantity, and sustainable economics over exploitation. In that future, carbon finance will become a transformative tool for global climate action, social progress, and ecological integrity. That’s the future we’re striving for at Demia and with our partners. We hope you join us on our journey. 

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 _{Rennert, K., Errickson, F., Prest, B.C. et al. Comprehensive evidence implies a higher social cost of CO2. Nature 610, 687–692 (2022). https://doi.org/10.1038/s41586-022-05224-9}

 _{https://www.spglobal.com/commodity-insights/en/news-research/latest-news/energy-transition/091124-voluntary-carbon-market-on-tenterhooks-but-compliance-prices-edge-higher}

 _{https://unu.edu/inra/report/rethinking-carbon-markets-africas-sustainable-future}

 _{https://forestry-carbon.com/news/2025/02/unveiling-the-carbon-dioxide-removal-market-whos-buying-and-selling-cdr-credits-in-2024}

 _{https://carboncredits.com/carbon-credits-surge-16b-fuels-2024s-race-for-high-quality-offsets}

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