The Voluntary Carbon Market (VCM) Rebounds: A Concentrated Growth Story
In a recent review, AlliedOffsets has shed light on the intriguing growth trajectory of the VCM in 2025. The report, available at https://alliedoffsets.com/wp-content/uploads/2025/12/2025-VCM-Overview-Report.pdf, reveals a notable expansion that has occurred in a rather concentrated manner.
AlliedOffsets, a firm with an extensive database tracking over 36,000 projects from 35+ registries and 28,000+ corporates, has highlighted key developments in the VCM landscape for the year 2025. Here's a deeper dive into their findings:
A Shift Towards Growth and Carbon Removals
After two years of contraction, the VCM experienced a resurgence in 2025. Carbon retirements surpassed 2024 levels, and offtakes reached an all-time high. The total market value exceeded $10 billion for the first time since AlliedOffsets began tracking the VCM in 2020. This upward trend was accompanied by a structural shift favoring carbon removals.
Concentrated Demand and Geographic Diversification
Despite the positive growth, demand remained concentrated among a select group of buyers, countries, and project types. However, there was a glimmer of hope with policy support and standards improving. Retirements and offsets grew by approximately 100 million tons compared to 2024, but the number of unique buyers remained similar to previous years, indicating a trend of increased volumes by a limited group.
Interestingly, 2025 saw an increasing number of first-time purchasers from Asia and parts of Europe, suggesting a potential shift towards geographic diversification of demand in 2026. This could be a game-changer, bringing new dynamics to the VCM.
Dominance of Biomass-Based Removals and Market Dominance
Issuance volumes reached unprecedented heights, primarily driven by deals involving biochar, utilization, bio-other, and BECCS. This highlights the continued dominance of biomass-based removals in the market. Carbon removal offtake deals saw a remarkable 305% increase between 2024 and 2025, with Microsoft leading the market. However, despite higher transaction volumes, overall CDR investment slowed in 2025.
Policy and Integrity Support: A Double-Edged Sword
The year 2025 brought strengthened policy and integrity support for the sector. Approximately 50% of implemented and emerging compliance and regulatory schemes either already accepted offsets or were considering their inclusion. This is a positive step forward. However, limitations persist, such as the constrained supply of CORSIA Phase 1 due to the limited availability of adjusted credits.
In a retrospective comment, Anton Root, Head of Research at AlliedOffsets, reflected, "2025 was a year of resilience for the VCM. Companies have restructured, reevaluated, and learned from past mistakes. As we enter the new year, there's a cautious optimism that the worst is behind us, a sentiment largely absent in recent times."
The Way Forward: A Call for Discussion
The VCM's growth in 2025 is an intriguing development, but it raises questions. How can we ensure a more inclusive and diverse market? What steps can be taken to address the limitations and constraints highlighted in the report? And most importantly, how can we accelerate the transition towards a more sustainable future?
Let's continue the conversation in the comments. Share your thoughts, insights, and opinions on the VCM's growth and the path forward. Your voice matters in shaping the future of this critical market.
