The carbon market, or the market for carbon removal credits, could be worth $250 billion a year. Yet, there are not enough buyers or investors in this market. 

Only a few large players like Microsoft and Stripe are purchasing at scale, holding 35% and less than 5%, respectively. This is significant because “a lack of buyers means that new technologies are unlikely to get funding and be deployed at scale.”

Companies are wary of the potential risks of investing in nascent technologies of this still-developing field. Many of the technologies are unproven and lack a long track record. They fear public criticism for “buying offsets” instead of investing that money on reducing their own emissions.

Problems, such as non-fungibility and lack of liquidity, further complicate the situation. Not all carbon credits are the same. They vary in:

• How they remove CO2 (e.g. by planting trees, using machines—Direct Air Capture)

• How long the CO2 stays out (permanence)

• How certain we are about the results

• Can we measure the results (verifiability)

• Cost per ton

These differences make carbon credits hard to compare. Since they don’t feel equal in value, buyers can’t easily swap one type for another. That’s called non-fungibility. That makes the market less active, especially for less common credit types. It becomes harder for sellers to find buyers willing to pay a fair price. To get their money back, sellers might accept lower prices, causing prices to become unstable or unclear. This lack of consistency and liquidity slows down the market growth.

I believe governments and organizations involved in climate action should actively work to address these market issues. If they can make carbon credits easier to compare and boost trust in the system, it would encourage more buyers and investors to participate. A more stable, transparent market could help scale up actual carbon removal efforts. (The Wall Street Journal, April 28, 2025)