Europe Shapes the Voluntary Carbon Market

Climate Impact Partners’ Claims and Assessment Director, Chris Duck, shares key updates on Europe’s increasing focus on the Voluntary Carbon Market and driving quality and integrity.

Across Europe, momentum is gaining as countries actively seek to harness the potential of the Voluntary Carbon Market (VCM) while prioritizing the integrity of climate claims. Recognizing the VCM's role in accelerating climate action, countries like France and Germany, alongside the UK, are implementing measures to ensure companies have access to high-quality carbon credits.

This proactive approach aims to ensure a robust and transparent market  enabling corporates to make climate claims, underpinned by carbon credits, with confidence. This effort unfolds against the backdrop of evolving regulations, notably the EU Green Claims Directive, which seeks to set out guardrails for companies making climate-related claims where they use carbon credits. Agreements on topics impacting these claims are likely to be covered in the next political trilogue on 10 June this year.

French Government Charter for Paris-aligned and high integrity use of carbon credits

The French government, during the Paris ChangeNow Climate Conference in late April, launched its "Charter for Paris-aligned and high integrity use of carbon credits." This concise yet impactful document, spearheaded by the French Minister for Ecological Transition, Biodiversity, Forests, the Sea, and Fisheries, Agnès Pannier-Runacher, provides guidance for companies navigating the complexities of carbon credit investments – Climate Impact Partners is a signatory to the charter.

The charter champions two fundamental principles:

• Prioritizing deep decarbonization aligned with Net Zero targets consistent with the Paris Agreement
• Selecting high-integrity carbon credits that adhere to the spirit and rules of Article 6.4 of the Paris Agreement, as well as integrity initiatives like the ICVCM’s (Integrity Council for the Voluntary Carbon Market) Core Carbon Principle (CCP) labelled credits.

Companies, including Schneider Electric, have endorsed the Charter.

Germany Signals Potential use of Carbon Credits to Meet Climate Targets

Germany is also signalling a significant shift in its approach to carbon markets. In a recently published Treaty, the new coalition government, demonstrated a clear alignment with ambitious climate targets, including support for the EU's goal of a 90% emissions reduction by 2040.

Notably, the treaty acknowledges the essential role of carbon dioxide removals (CDR) in achieving Net Zero and expresses openness to the utilization of international carbon credits at both the domestic and EU levels, potentially allowing for up to 3% of the 2040 emissions reduction target to be met through these mechanisms.

This policy direction is further reinforced by Germany's recent announcement of a substantial €100 billion investment in the Climate and Transformation Fund. This significant financial commitment aims to revitalize Germany's leadership in climate innovation. However, a key condition attached to the allocation of these funds is "additionality," ensuring that the investments genuinely accelerate climate action beyond existing budgetary commitments. This focus on additionality reflects a growing understanding of the need for carbon finance to drive real, measurable impact.

UK Government VCM Consultation

In its recent consultation, the UK Government set out what it sees as high quality in today’s market. This clarity is paramount, building upon the considerable thought leadership and integrity initiatives that have shaped both the supply and demand sides of the market since its inception. Enhanced due diligence, evolving methodologies, ratings agencies, and advanced MRV tools have all contributed to this progress. The government's move to synthesize this thinking into clear principles is a welcome development.

The six principles outlined by the government resonate strongly with the best practices already adopted by many within the market:

1. Use credits in addition to ambitious actions to reduce emissions within the value chain.
2. Use high integrity credits that meet an established criteria and deliver environmental outcomes claimed
3. Measure and disclose the planned use of credits as part of sustainability reporting
4. Plan ahead and integrate credit use into transition planning and net zero strategies, over ad hoc purchases. Watch our Buy Smart: Avoid the Carbon Credit Crunch webinar to support your carbon credit strategy
5. Make accurate green claims using appropriate terminology.
6. Co-operate with others to support the growth of high integrity markets.

Looking Ahead

These developments across France and Germany, alongside the UK Government's ongoing consultation on defining high-quality carbon credits, underscore a Europe-wide trend towards backing a high quality and impactful Voluntary Carbon Market. By focusing on robust standards, transparency, and alignment with overarching climate goals, these initiatives aim to unlock the full potential of carbon finance in driving the transition to a net-zero economy. 

We will engage with the UK Government’s consultation, open until 10 July 2025 to drive forward quality and integrity in the voluntary carbon market.