July 2025
By Miles Austin, Chief Executive Officer, Hyphen Global AG; and
Stefan Flueckiger, Honorary President, Green Fintech Network
As the climate crisis deepens, the need to mobilise large-scale capital for climate action has never been more urgent. Carbon markets, especially the voluntary carbon market (VCM), have emerged as a key mechanism, enabling countries and companies to offset emissions by supporting carbon reduction or removal projects. But these markets are now at a crossroads.
Once growing rapidly, the VCM is facing scepticism. Major corporations have paused purchases, credit prices have dropped, and institutional investors remain hesitant. Against this backdrop, the Green Fintech Network convened a high-level roundtable at the Point Zero Forum 2025 in Zurich, gathering regulators, investors, start-ups, infrastructure providers and project developers. The dialogue revealed both the causes of current mistrust and the solutions needed to rebuild a functional, trustworthy carbon market. There were five key takeaways from the roundtable.
1. Carbon Markets Have Come a Long Way
Carbon markets have evolved over the past two decades in parallel with the international climate framework, mainly the Framework Convention on Climate Change and its Paris Accord. Many governments, Switzerland among them, have adopted net-zero targets and mandatory climate impact reporting.
The total value of global carbon markets reached a record 949 billion USD in 2023 (to which the European ETS market alone contributed about 800 billion USD), up from some 200 billion USD in 2015. The voluntary carbon market grew from USD 300 million in 2018 to over USD 2 billion in 2021. Although prices and volume fluctuated thereafter, investment in high-quality credits and nature-based solutions continued to grow.
2. The Challenges: Fragmented Regulation and Reporting Standards
Carbon markets suffer from regulatory fragmentation and a lack of harmonised guidance. One participant highlighted G20 initiatives to address these gaps. The Climate Data Steering Committee’s work on a global carbon credit data model was noted as a promising step toward standardisation.
One participant emphasised interoperability: “Specialisation is good—but without a shared language, we spend more time translating than building.”
Another participant echoed this concern, warning that without alignment between national frameworks and buyer criteria, the benefits of scale will be lost.
3. Digital Innovation and AI are Making Inroads: Tech as a Trust Enabler
Trust in carbon credits hinges on data quality and transparency. Digital MRV (Monitoring, Reporting and Verification) is changing the game. Start-ups like Open Forest Protocol and Hyphen Global are using blockchain, eddy covariance flux towers, satellite imaging and AI to monitor carbon impacts in real time.
These tools can offer verifiable, immutable records and reduce MRV costs, which are particularly helpful for small or community-led projects. Additionally, embedding transparency by design helps lower entry barriers, and can also accelerate financing by generating trusted early-stage data.
Open Forest Protocol is establishing a scalable, cost-efficient carbon standard and MRV solution that lowers market entry barriers—particularly for smallholder and community-based projects. Meanwhile, Hyphen Global is pioneering real-time, direct measurement of carbon removals through the deployment of eddy covariance flux towers, enabling high-resolution, precision MRV for nature-based solutions. In both cases, transparency is embedded by design. By leveraging digital infrastructure, these platforms significantly reduce the cost and complexity of entering the carbon market, accelerating verification timelines and enabling earlier access to climate finance backed by real, direct measurement and quantification, resulting in high quality carbon credits.
4. Financing Carbon Projects: Blending Risk and Returns
The core challenge in financing carbon projects is managing perceived binary risk: projects are often seen as either fully successful or failures. One participant shared how her firm uses long-term offtake contracts (e.g. with Microsoft) and bespoke insurance to de-risk projects, borrowing from proven project finance models in infrastructure and renewables.
These financial structures are essential to making carbon investments bankable, particularly when deploying long-term capital into emerging markets or unproven methodologies.
5. Defining a Ton: The Measurement Debate
One unresolved issue is the definition of “one ton of carbon.” Tech-based methods like Direct Air Capture (DAC) offer permanence and traceability but at a high cost. Nature-based solutions offer co-benefits like biodiversity and community development but face challenges in measurement, leakage and permanence.
One participant explained the company's strategy of combining both and treating "carbon removal like a diversified asset class", assessing every project, be it nature or tech, "across 20 metrics to evaluate trust, impact, and risk." Another participant outlined his organisation's efforts to build infrastructure that turns carbon into an investable asset class, focusing on custody, pricing and digital MRV. One participant added that credit buyers increasingly prioritise operator transparency, geographical relevance, quantifiable co-benefits and credible MRV.
Conclusion: Designing the Carbon Market of Tomorrow
While challenges remain, there is a shared sense of cautious optimism among market participants. Demand is steadily increasing—particularly for high-quality carbon removals underpinned by verifiable data. Regulatory frameworks are beginning to coalesce, providing a clearer foundation for market development. At the same time, digital tools and advanced MRV systems are enhancing transparency, operational efficiency, and the credibility of impact measurement and quantification.
A new generation of investors is also emerging, ready to integrate carbon into diversified climate-focused portfolios. For the carbon market to realize its full potential, it must successfully bridge two essential domains: the rigor of large financial systems and the science and complexity of ecological systems. This requires a market architecture grounded in transparency, data integrity, accurate quantification, and an unwavering commitment to continuous improvement.