Voluntary carbon markets (VCMs) allow governments and non-state actors to purchase voluntary carbon units to offset emissions while financing mitigation activities and nature-based solutions. They are increasingly seen as tools to support climate goals, restore ecosystems, and deliver wider sustainable development benefits. At the same time, they raise challenges around integrity, permanence, and additionality.
The Welsh Government asked WCPP to provide evidence on how other countries have developed relevant policies, schemes and regulations to better govern VCMs, and how these lessons might be applied in Wales. WCPP commissioned LSE Consulting, using staff from the Grantham Research Institute on Climate Change and the Environment, to review international approaches and identify policy options.
We were asked to explore:
- How governments elsewhere have developed policies, schemes and regulations for VCMs, including principles of integrity, integration with decarbonisation pathways, approaches to removing v avoiding greenhouse gases, accounting for traded units, and delivery of co-benefits.
- The risks and unintended consequences of VCMs, and strategies to mitigate them.
- How lessons from other countries and regions could be applied in Wales, aligned with climate and well-being goals.
Our report includes analysis of four case studies – Australia, Finland, Portugal, and Scotland – reflecting different governance structures, market maturity, and potential for land-based mitigation.
The cases highlight the range of diverse approaches to VCMs but point to common lessons:
- VCMs can provide additional finance for mitigation activities, particularly carbon sequestration and nature recovery, but must complement, not replace, domestic emissions reductions.
- Growing emphasis is placed on environmental co-benefits, where nature and carbon markets are jointly considered.
- Strong governance, integration with land-use policies, demonstration of clear additionality, and avoidance of double counting.
The accompanying policy brief summarises practical lessons for how Wales can engage with VCMs to advances its climate and nature goals, while aligning with the Well-being of Future Generations (Wales) Act 2015 and net zero Wales commitments. Key priorities include integrating VCMs with land-use policy, aligning standards with UK/EU frameworks, and reducing complexity through consistency with existing UK schemes. Embedding just transition principles will also be essential to ensure VCMs support rural communities, create good-quality jobs, and build public trust.
We also held a roundtable in July 2025 with academics, Welsh Government officials, and a representative from the Climate Change Committee. This reinforced the role of VCMs in supporting Wales’ decarbonisation and adaptation goals. Participants stressed the need to ensure additionality and credit integrity, stimulate demand while safeguarding claim integrity, establish robust and transparent governance structures, and maximise co-benefits across climate, nature, and communities. Innovative models, such as a potential ‘carbon central bank’ to manage issuance, risk, and accountability, were also discussed.
