The voluntary carbon market collapsed in slow motion through 2023. Investigative reporting on REDD+ overcrediting, a peer-reviewed Nature study finding that fewer than 16% of issued credits represented real reductions (just 11% for cookstoves), and a buyer flight that halved spot prices, by year-end, the obituaries were written.
Two years later, the obituaries have aged badly. The market is roughly the same size. The credits clearing it look almost nothing like the credits that cleared it in 2022. In South Asia, where most of the supply-side action sits, the implications are specific, and they reward developers who read the new rulebook early.
Here is the journey from the reset to where 2026 actually sits.
Stage 01, The integrity gate
The Integrity Council for the Voluntary Carbon Market (ICVCM) didn't replace Verra or Gold Standard. It sat above them. By early 2026 it had approved eight carbon-crediting programs as CCP-Eligible, covering roughly 98% of historical market volume, and 38 methodology categories as CCP-Approved, with 22 rejected.
The list of categories that didn't make the cut is the more interesting one.
Definition What are CCP-labelled credits? +
CCP (Core Carbon Principles) labels are quality designations issued by the Integrity Council for the Voluntary Carbon Market (ICVCM). A credit carries the CCP label only if it comes from an ICVCM-approved carbon crediting program and an ICVCM-approved methodology category. CCP criteria assess additionality (would the reduction have happened anyway?), permanence (will it persist?), measurement accuracy, and absence of significant harm. CCP-labelled credits now anchor the bid side of the voluntary market and trade at a measurable premium over unlabelled credits.
- Improved Forest Management (VM0045) First nature-based methodology with full CCP label.
- Afforestation, Reforestation & Revegetation (ARR) Isometric ISM Reforestation Protocol v1.1, full approval.
- Biochar production & storage Three biochar methodologies cleared in 2025.
- Biogas / household methane capture Conditional approval; community MRV uplift required.
- Landfill gas capture Methane destruction with strong baseline integrity.
- REDD+ (jurisdictional, VM0048) Conditional CCP, additionality and leakage baked in.
- Rice methane reduction (Gold Standard) Conditional, additionality + soil organic carbon rules.
- Engineered CDR Geological storage, BiCRS, accelerated carbonation.
- Grid-connected renewables (ACM0002) No longer additional, renewables are economic in most markets.
- AMS-I.D cookstoves (older versions) Overstated reductions, weak fuel-baseline assumptions.
- Legacy avoided-deforestation REDD+ (project-scale) Baselines inflated; only jurisdictional approach now passes.
- Industrial gas destruction (low integrity) Perverse incentives flagged; tightly conditional.
- Wind power (legacy CDM) Same additionality failure as ACM0002.
What's in: improved forest management, afforestation/reforestation/revegetation (ARR), biochar, biogas, landfill gas capture, REDD+ (conditionally, under Verra's VM0048), rice-methane reduction, and a growing list of engineered carbon-dioxide-removal categories. CCP-labelled credits trade at a measurable premium and now anchor the bid side of the market.
Stage 02, The demand stack hardens
Four forces are concentrating demand onto a narrow slice of supply.
CORSIA Phase 1 (2024–2026) compliance for international aviation is due in 2028; IATA projects airlines will need 64–162 million eligible units. The EU's Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase in 2026, pricing embodied carbon in steel, cement, aluminium, fertiliser and electricity exports, directly relevant for Indian, Bangladeshi and Pakistani manufacturers. The EU's Empowering Consumers Directive bans generic "climate neutral" claims from September 2026, killing low-grade offset demand at the consumer-product end. SBTi's Net-Zero Standard 2.0 introduces interim removal obligations of roughly 0.5–2.8% of total emissions by 2030, scaling to 10% by 2050.
Definition What is CORSIA? +
CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) is the International Civil Aviation Organization (ICAO) mechanism requiring airlines operating international routes to offset growth in CO₂ emissions above 2019 baseline levels. In its first compliance phase (2024–2026), participating states must ensure their airlines buy CORSIA-Eligible Emissions Units (CEEUs) to cover their offsetting obligation, due in 2028. The scheme creates a significant regulated demand source, IATA estimates 64–162 million units needed, concentrated on a narrow set of approved project methodologies.
Composite signal: integrity-labelled credits and durable removals are the only assets compatible with the next decade of corporate procurement.
Stage 03, Article 6 is now a real market, not a slide deck
COP29 in Baku finalised the Article 6 rulebook in November 2024. The two years since have been the bilateral-deal era. Singapore alone has signed 28+ Article 6.2 implementation agreements and MOUs; its February 2025 tender for nature-based Article 6 credits attracted bids at S$25–S$55 per tonne ($18–$41), well above the voluntary forestry REDD+ benchmark of around $12. Switzerland's Klik Foundation has paid CHF 27 (~$30) for Thai e-bus ITMOs.
Definition What is Article 6 and what are ITMOs? +
Article 6 of the Paris Agreement creates a framework for countries to cooperate in achieving their NDC targets through carbon markets. Article 6.2 allows bilateral deals between governments: Country A funds emission reductions in Country B; the reductions are issued as Internationally Transferred Mitigation Outcomes (ITMOs) and subtracted from Country B's NDC via a corresponding adjustment. This prevents double-counting. ITMOs typically command a premium over standard voluntary credits because the sovereign guarantee and corresponding adjustment make them compatible with the strictest corporate net-zero frameworks and CORSIA compliance.
Article 6 credits clear higher because they require the host country to authorise the unit and apply a corresponding adjustment, the reduction is subtracted from the host's nationally determined contribution (NDC). For South Asian developers, the binding constraint is rarely methodology. It is the Designated National Authority (DNA). India, Pakistan, Bangladesh and Sri Lanka have all stood up DNAs, but issuance pipelines are slow; the projects landing first are the ones that engaged the DNA before submitting to a registry.
Stage 04, The South Asian terrain
South Asia is not one market. Each country's binding constraint and standout asset class look different.
The compliance market arrives. CCTS goes live H2 2026, covering ~740 entities across nine sectors. Voluntary offset mechanism already operational. India–Japan MOU signals export ambition.
Blue carbon leadership. Delta Blue Carbon, the world's largest mangrove restoration project, issues at scale under VM0033. The most technically credible South Asian supply story.
Coastal pivot. Mangrove and tidal restoration are well-suited to the geography. Legacy cookstove portfolios face revenue compression as older methodologies lose CCP eligibility.
Nascent, but well-positioned. Climate Prosperity Plan creates room for Article 6.2 deals. No agreement signed yet. First-mover host country advantage still available.
India is the most consequential development. The Carbon Credit Trading Scheme (CCTS) compliance market goes live in H2 2026, covering roughly 740 entities and over 700 million tCO₂e across nine industrial sectors. The voluntary offset mechanism is already operational. Two consequences follow: domestic Indian credits now have a regulated bid (CBAM-exposed exporters), and India has signalled it will export Article 6 supply, most clearly via the recent India–Japan MOU.
Pakistan's standout asset class is blue carbon. Delta Blue Carbon in the Indus Delta, the world's largest mangrove restoration project, has issued at scale under Verra's VM0033, and the second-generation Sindh-led pipeline is the most technically credible South Asian supply story.
Bangladesh mirrors that profile: mangrove and coastal restoration are well-suited; legacy cookstove portfolios face revenue compression as older methodologies lose CCP eligibility.
Sri Lanka is nascent, a Climate Prosperity Plan and a 70%-renewables-by-2030 target create policy room for Article 6.2 deals, but no agreement is signed yet.
Stage 05, What to do in 2026
Lead with the methodology, not the asset. If it isn't on the CCP-Approved list, or in active assessment, you are building a credit that will struggle to clear in three years.
Build for digital MRV from day one. Satellite biomass monitoring, IoT for stove or biogas usage, community-collected data on a registry-ready schema.
Engage the DNA before the registry. Sovereign authorisation is the Article 6 bottleneck, not technical validation.
Bundle for optionality. A project authorised for both VCM (CCP-labelled) and Article 6 (with corresponding adjustment) commands the highest blended price.
Move from avoidance to removals. Particularly nature-based removals with strong co-benefits, where South Asia is structurally well-placed.
The market is not smaller. It is sorted.
Ennacle advises project developers and corporate buyers across South Asia on methodology selection, MRV design, Article 6 authorisation, and CCP-aligned procurement.