The Financial Markets Standards Board (FMSB) has published a Spotlight Review updating its 2022 work on voluntary carbon markets and expanding the analysis to include compliance carbon markets. The review recognises continuing progress in market design and operation, but concludes that key structural challenges are still constraining carbon markets’ ability to scale. The paper points to increased coverage and tighter emissions caps in a number of jurisdictions’ compliance schemes, alongside improvements in certification practices in voluntary carbon markets. It also identifies fragmentation and the non-fungibility of credits across markets as obstacles that will require international cooperation to address, and considers how voluntary and compliance markets, as well as national and international markets, could potentially integrate over time into a more coherent framework.
Financial Markets Standards Board 2025-07-21
Financial Markets Standards Board publishes Spotlight Review on carbon markets and highlights fragmentation barriers to scaling
The Financial Markets Standards Board published a Spotlight Review updating its 2022 analysis on voluntary carbon markets and expanding it to compliance carbon markets. It highlights ongoing progress but notes structural challenges hindering market scalability. The review emphasizes increased coverage and tighter emissions caps in compliance schemes, improved certification in voluntary markets, and the need for international cooperation to address market fragmentation and credit non-fungibility.