USG plant and Weyerhaeuser export docks, lower Columbia River. Photo: Jeffrey St. Clair.
The voluntary carbon market, or VCM, has been promoted as a tool for businesses, governments, and other entities to offset their greenhouse gas emissions by purchasing carbon offset credits from projects that purportedly reduce or remove carbon dioxide emissions from the atmosphere. In theory, these credits allow buyers to compensate for emissions by paying another actor for carrying out activities that are meant to reduce emissions elsewhere. This can include projects ranging from forest conservation to renewable energy and ecosystem restoration worldwide.
Yet the reality of the VCM is far more complex and fraught with structural challenges than most outsiders realize.
A 2025 report by Corporate Accountability analyzing the world’s largest carbon offset projects found widespread structural failures, revealing that even projects promoted by the market’s leading registries often fail to deliver the promised emissions reductions reliably. These challenges are systemic, spanning multiple registries, sectors, and project types, including forest conservation projects under REDD and REDD+ frameworks, large-scale hydropower and wind energy, cookstove and household efficiency initiatives, and industrial emissions reduction projects. The failures are neither isolated nor accidental but appear to reflect recurring patterns across the voluntary carbon market.
Verra, the largest registry in the VCM, continues to dominate the market despite repeated exposure of flaws in its projects. Many other registries, including the Gold Standard Impact Registry, Climate Action Reserve, and the American Carbon Registry, also host projects with questionable integrity. Across these registries, independent ratings agencies have rated many projects as having a moderate to low likelihood of delivering the promised emissions reductions, meaning that tens of millions of carbon credits may not represent real emissions cuts. The persistence of these risks demonstrates that the associated loopholes are not the result of a single “bad actor” but systemic and deeply embedded in the VCM’s design.
One of the central principles underpinning any carbon offset project is the concept of additionality. An offset can only be considered additional if the emissions reductions it delivers would not have occurred without the revenue generated from selling carbon credits. For example, planting trees on degraded land, capturing methane from waste that would otherwise be released, or investing in energy efficiency measures in homes can, in theory, represent additional reductions. Projects that fail to meet this standard may be selling credits that do not correspond to real climate benefits. Other critical standards include permanence, ensuring that carbon reductions are lasting and not reversible; leakage, which prevents reductions in one area from causing increases elsewhere; and proper accounting, which avoids over-crediting or double-counting credits.
Forest conservation projects are among the most widely utilized but also the most scrutinized. REDD and REDD+ initiatives, which aim to reduce emissions from deforestation and forest degradation, have often been over-credited or poorly managed. For example, the Proyecto Agrupado YAAWI IIPANA in Colombia retired over 1.5 million credits in 2024, despite covering areas already protected by law and overlapping with Indigenous territories. Project developers linked to other initiatives have faced allegations of inflating baselines and excluding local communities from meaningful participation. Similarly, the Proyecto Nuestro Aire de Vida “Kai KOMUYA JAG+Y+”in Colombia covers land that is 97 percent Indigenous territory, raising concerns about both additionality and compliance with the principles of Free, Prior, and Informed Consent.
Large hydroelectric projects illustrate another recurring failure of the VCM. Grid-connected facilities in countries such as China, Colombia, India, and Turkey have received offset credits for emissions reductions that would have likely occurred anyway, undermining the concept of additionality. Projects like the Sogamoso Hydroelectric Projecthave faced social and environmental controversies, including reports of displacement, threats to local communities, and questionable long-term climate benefits. Large hydropower, wind energy, and other renewable energy projects hosted under frameworks such as the Clean Development Mechanism have frequently faced over-crediting risks and questions about additionality, raising concerns that many approved projects would likely have moved forward even without carbon finance.
Household and industrial efficiency projects, including cookstove initiatives, also exhibit reliability challenges. Some projects have been over-credited or have failed to achieve expected reductions due to underperformance, insufficient monitoring, or flawed baseline assumptions. Even where localized or non-climate benefits exist, these projects often contribute only marginally to overall emissions reductions and rarely compensate for the scale of emissions generated by industrialized economies.
Even projects that receive higher ratings from independent analysts are not risk-free. Verra’s Rimba Raya Biodiversity Reserve and other well-known projects show notable leakage and non-permanence risks, indicating that even highly rated offsets can conceal fundamental flaws. Among the 37 largest projects from 2024 that we analyzed in greater detail, all had a legitimate risk of at least one fundamental failure, and more than half had a legitimate risk of multiple compounding failures.
The involvement of multiple actors with vested interests further complicates the VCM. Registries, project developers, verifiers, and investors are all incentivized to maximize credit issuance and trading, creating structural conflicts of interest that make self-regulation unreliable. Third-party verifiers, tasked with assessing whether projects meet registry standards and deliver real emissions reductions, have often approved projects that later proved problematic. The persistent failures of these “checks and balances” suggest that industry oversight alone is insufficient to ensure the integrity of the VCM.
These structural and governance failures also have equity implications. The world’s largest offset projects are heavily concentrated in low-income countries, while many registries, standards organizations, and verifiers are headquartered in wealthy nations. Communities across low-income nations, which have historically contributed the least to global emissions, often bear the social, environmental, and economic burdens of projects that fail to deliver meaningful climate benefits– not to mention the impacts of the broader global failure to meaningfully address the climate crisis. These inequities are compounded when project revenues are not fairly and transparently reinvested into local communities and managed by these communities, despite claims of social and economic co-benefits. The result is a market that amplifies historical injustices while failing to achieve its environmental goals.
Beyond the structural and equity challenges, the VCM has repeatedly demonstrated risks to social and environmental integrity. Forest conservation, land use, and renewable energy projects have been linked to violations of Indigenous rights, forced displacement, and exclusion from decision-making. Cookstove projects, while intended to improve public health and reduce emissions, have been accused of over-credited reductions or neglected community needs. Large hydropower and wind projects produce limited additional emissions reductions and, in some cases, are reported to exacerbate local harms.
These failures raise broader questions about the role of the VCM in climate action. Why are projects that are unlikely to deliver emissions reductions still widely utilized? Why do investors, policymakers, and corporations continue to engage with a system that introduces significant liability and uncertainty? Can a market built on voluntary commitments and largely self-regulated oversight ensure the systemic rigor needed to tackle a global crisis? Evidence from the largest projects suggests that current reforms and standards have not fundamentally addressed these questions.
Even with the transition to VCM 2.0, with updated standards and methodological improvements underway, systemic conflicts of interest and equity concerns persist. Over-crediting, non-additionality, leakage, and non-permanence remain significant risks, and communities in low-income countries continue to bear the brunt of failed or underperforming projects. While certain projects may yield localized or short-term benefits, the market as a whole struggles to provide meaningful, verifiable, and lasting climate impact. Continued reliance on problematic credits risks delaying real climate action, diverting resources and attention from proven solutions.
Addressing these systemic problems requires more than incremental reform or industry-led initiatives. Transparent governance, rigorous independent verification, and accountability mechanisms are essential. Climate strategies should prioritize equity, permanence, and real emissions reductions over market efficiency or volume of credit trading. Policymakers, investors, and corporate actors need to critically assess whether participation in the voluntary carbon market genuinely advances climate goals or inadvertently perpetuates harm and inequity.
Ultimately, the structural flaws, conflicts of interest, and insufficient safeguards within the voluntary carbon market do not suggest it is fit for purpose. At present, evidence suggests the VCM is more likely to contribute to climate inaction than to drastically and justly reduce global greenhouse gas emissions. To achieve meaningful climate action, the focus needs to shift to direct, lasting emissions reductions at the source, systemic reform, and projects that reliably protect communities and restore ecological balance.
