The Future of the Voluntary Carbon Market: What to Expect by 2040

The voluntary carbon market (VCM) is evolving rapidly, and by 2040, it could become one of the most important channels for global climate finance. According to the AlliedOffsets Forecast Report (March 2025), demand for voluntary carbon credits could expand more than tenfold, driven by companies, investors, and governments stepping up their climate ambitions. For developers, particularly those focused on cookstove projects, this represents a significant opportunity to deliver both carbon reductions and social impact.

Explosive Growth in Demand

By 2040, annual demand for carbon credits could reach billions of tonnes of CO₂e. Industries such as aviation, technology, and manufacturing are expected to rely on carbon credits to address residual emissions that remain even after deep decarbonization. For cookstove projects, this surge in demand is particularly promising, as efficient cookstoves directly reduce household emissions while improving health and livelihoods in local communities. Meeting such high demand will require a diversified supply base that spans nature-based solutions, carbon removals, and community-focused projects like cookstoves, ensuring market resilience and continuity.

Cookstoves Leading the Way in Impact

The VCM is gradually shifting toward projects that demonstrate both environmental and social impact. While large-scale renewable energy projects will become less relevant as clean energy becomes cost-competitive, community-driven solutions like cookstove initiatives are set to play a central role. Efficient cookstoves reduce emissions, cut fuel use, and improve indoor air quality, delivering measurable carbon reductions alongside tangible social benefits.

Nature-based solutions such as afforestation, reforestation, and avoided deforestation will complement cookstove projects, while carbon removals from emerging technologies like direct air capture and biochar are expected to scale significantly after 2030. By 2040, carbon credits that combine verified emissions reductions with Sustainable Development Goal (SDG) co-benefits, such as improved health and livelihoods, will dominate the market, positioning cookstove projects as high-value, high-impact investments.

Rising Prices and the Importance of Integrity

As supply tightens and buyers become more discerning, carbon credit prices are projected to reach $30–$50 per tonne by 2040, with additional premiums for projects that can demonstrate verified social and environmental co-benefits. Integrity will be a key driver of value. Frameworks such as the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Voluntary Carbon Markets Integrity Initiative (VCMI) are raising the bar for transparency and credibility. For project developers, this emphasizes the importance of robust verification, monitoring, and reporting to maintain market relevance and capture premium pricing.

Regional Trends: Where Cookstoves Make a Difference

Regional dynamics will continue to shape the VCM. Africa and Latin America are expected to lead in nature-based and community projects, supported by strong biodiversity and social outcomes. In Asia, large-scale community initiatives including household energy programs like cookstoves will remain a cornerstone of emissions reduction efforts. OECD countries, meanwhile, are likely to focus on scaling carbon removals through technological solutions. This global balance ensures that cookstove projects contribute not only to climate mitigation but also to inclusive development across the world.

Looking Ahead to 2040

By 2040, the voluntary carbon market is expected to be significantly larger, valued at $50–100 billion annually, built on rigorous integrity standards, more diverse in project types, and increasingly impact-driven. Projects that combine measurable emissions reductions with clear community and environmental co-benefits will stand out. Protecting forests, scaling removals, and providing clean household energy will collectively form the backbone of the market.

Written By: Benjamin Michelson

Source: AlliedOffsets Market Forecast Report (March 2025)

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