The Voluntary Carbon Market is one way in which carbon pricing is being implemented in practice in corporate operations. Its unit of account is the carbon credit, a transferable certificate that proves that a participant has achieved an additional emission reduction or carbon removal equivalent to 1 ton of carbon dioxide, but has transferred the right to make green claims to another market participant in exchange for financial compensation. The actors - whether they are standard owners, project developers, certifiers, green investors, or credit buyers - all enter the market voluntarily, so their activities go beyond regulations and national commitments, i.e., they produce additional results in climate action.
The market is undergoing significant changes, with interrelated megatrends changing the way trade is conducted (forward offtake agreements), joint decarbonization by participants in corporate value chains is being emphasized as a new strategic approach (insetting), and the transformation of standards is methodologically legitimizing offsetting in order to generate demand. Let us now turn to the main focus of voluntary climate action and the resulting fundamental change in project development directions: this is the combination of technological carbon removal and nature-based carbon farming, which has been at the forefront of the transformation process with the European Union's new regulatory package.
Emissions reduction has failed spectacularly
I have already discussed this fact in detail in several previous articles, so I will only summarize it briefly here. In recent years, the Voluntary Carbon Market, which has traditionally been based on emission avoidance and reduction projects, has struggled with accusations of credibility, integrity, and greenwashing. As a result, voluntary offsetting has been stagnating for the past three years, with an annual offset turnover of 200 million tons of carbon dioxide equivalent and an average end-user price of $6-7 per ton. However, a long-term breakthrough in voluntary initiatives on the demand side and the development of carbon pricing that enables appropriate, high-quality project development are vital to the success of the green transition. As the annual project development volume is about twice the modest retirement volume mentioned above, the stock of unsold carbon credits, which is aging and currently exceeds one billion tons, is constantly growing and keeping the market under constant selling pressure.
At the same time, the legal constraints on emission reductions have been significantly relaxed, and traditional demand is slackening. Due to the significant costs of emission reduction, traditional industries are suffering spectacularly, which has forced decision-makers to partially abandon coercive green policies: the US has withdrawn from the Paris Climate Agreement, and the EU has eased the pressure on companies to reduce emissions with its omnibus regulation.
With the failure of emission reduction, we must acknowledge the fact that climate change is happening anyway, but its extent is very much a matter of concern. It is also important to note that the climate crisis is a set of problems affecting the global ecosystem, which can only be solved at the global level. However, the crisis of legitimacy and financing of traditional international organizations (e.g., the UN) – in a world order that is transforming before our very eyes – makes it increasingly difficult to find global solutions. As a result, the introduction of the global voluntary carbon accounting system (PACM) based on the Paris Climate Agreement is also suffering significant delays. Spectacular signs of this include the failure of last year's COP30 climate summit and the total collapse of the Nairobi process aimed at solving plastic pollution. This rightly raises the question: where is the carbon market heading?
The EU shows the way
Climate action is, in game theory terms, an infinitely repeated non-zero-sum game in which individuals, companies, or nations must pursue strategies that run counter to their short-term interests in the long term, and in which cooperation - as the most successful theoretical strategy in the long term- is obviously not guaranteed. This is a signaling game, a game-theoretical setup in which one player has private information and uses it to send a signal to another player, who then interprets the signal and responds. In such a cooperative situation, the role of regional regulation becomes more important, which is a very strong signal for others to follow the signaler.
The EU was the first in the world to take this path with its voluntary carbon market regulation (CRCF): it adopted a unique set of transparency rules for voluntary carbon market certification systems, with the recent implementing regulation already containing complex quality requirements and regulating the work of certification bodies. This is a huge opportunity for the carbon market, as the essence of the regulation is that the EU not only legitimizes offsetting residual emissions with carbon credits covered by the regulation, but also directly encourages demand by creating a corporate buyer club. Wopke Hoekstra, the EU Commissioner for Climate Action, specifically mentioned signaling as a strategic goal: "The European Union is taking decisive action to lead the global effort in carbon removals. By establishing clear, robust voluntary standards, we are not only fostering responsible and climate action within Europe but also setting a global benchmark for others to follow. This a vital step toward achieving our climate neutrality targets and ensuring a sustainable future."
What does the new EU regulation cover?
The global failure to reduce emissions has led to an increase in the importance of climate adaptation and the removal and long-term sequestration (CDR) of excess carbon dioxide already released into the atmosphere by human activity. The concept of CDR can be divided into two basic segments: technology-based carbon removal and nature-based carbon farming. In recent years, removal carbon credits have gradually begun to replace certificates from emission reduction projects, which traditionally accounted for most of the supply.
The CRCF regulation therefore does not apply to all carbon credits, with which the EU is also setting the direction for future carbon market project development. The EU continues to not legitimize carbon credits from traditional emission avoidance or reduction projects (so they remain unchanged in the current integrity-based market self-regulation), with legal legitimacy and demand stimulation only applying to permanent carbon removal and carbon farming projects.
Technological carbon removal
The essence of carbon removal projects is that the carbon dioxide produced is removed from the atmosphere using technology and stored safely and permanently in the soil, rocks, oceans, or even in durable (typically construction) products, which we collectively refer to as carbon sinks. In early February 2026, the Commission adopted the first three permanent carbon removal methodologies, providing methodological, legal, and accounting support for them:
- Direct air carbon capture and storage (DACCS). This is a set of technologies that aims to extract carbon dioxide directly from the air using chemical processes and then store it permanently. Its advantage is that it can remove carbon dioxide regardless of the source of emissions, making it a particularly important tool for offsetting residual emissions and achieving negative emissions. However, it is currently quite energy- and cost-intensive, so its application is still limited. The EU's legal legitimacy is expected to give a strong boost to R&D projects in this promising but still nascent field.
- Biogenic carbon capture and storage (BECCS). A set of processes in which carbon dioxide emissions from biomass (e.g., from biogas plants, bioethanol production, or biomass power plants) are captured and then stored in a permanent carbon sink. Since the plants have already removed the carbon dioxide from the atmosphere in a short carbon cycle during their growth, capture and storage can result in negative emissions overall, provided that the entire supply chain is sustainable. However, it should be noted that land use, biomass supply, and storage infrastructure limitations currently pose significant challenges.
- Biochar-based carbon removal (BCR). In such projects, biomass is pyrolyzed in an oxygen-poor environment, resulting in stable, carbon-rich biochar. The product is used in soil cultivation or to create durable materials, removing biogenic carbon from the atmospheric carbon cycle for centuries and achieving truly negative emissions.
It is important to note that, in addition to cumbersome and expensive geological and aquatic carbon storage technologies, a special form of carbon capture that is expressly supported by the EU is the permanent storage of biogenic carbon dioxide for at least 35 years in bio-based construction products, which is an important element of the EU's new Bioeconomy Strategy. These could include wood-based building materials or lightweight concrete, plasters, various panels or insulating materials that store biochar, which have a promising market future.
Carbon farming
Carbon farming is about increasing photosynthetic and carbon dioxide sequestration capacity, i.e. nature-based carbon sequestration solutions related to agriculture, forestry, and water management. This includes agroforestry, the restoration of wetlands and peatlands, reforestation and afforestation projects, pasture and livestock management, and increasing the carbon sequestration capacity of soils through changes in farming practices. I will write about these project opportunities later, once the detailed rules for carbon farming methodologies have been published.
