VCMI, Climate Focus map policy tools to grow domestic carbon credit markets

A new report from the Voluntary Carbon Markets Integrity Initiative and Climate Focus outlines policy options governments can use to expand domestic carbon credit markets, attract private investment and strengthen high-integrity project supply. The findings come as the global annual climate finance gap reaches $1.3 trillion.

Why it matters: - Domestic carbon credit markets could unlock more private capital for national climate plans, especially in emerging markets and developing economies. - The report links stronger market rules to faster funding for emissions reduction, carbon removal and resilience projects. - The global annual climate finance gap stands at $1.3 trillion, underscoring why governments are looking beyond public finance alone.

What happened: - The Voluntary Carbon Markets Integrity Initiative and Climate Focus released a policy report in London on September 16, 2026. - The report sets out policy options governments can use to build and scale domestic carbon credit markets. - The report focuses on how countries can bolster investment into national mitigation activities and support high-quality carbon projects.

The details: - The report reviews policy instruments that countries have already used to strengthen domestic carbon credit markets. - It groups the recommendations into three main areas: attracting investment, driving demand and increasing the supply of high-quality credits. - For investment, the report points to government carbon market strategies, legal frameworks covering Article 6 and voluntary markets, agency capacity-building and national carbon registries. - For demand, the report suggests carbon credit purchase mandates tied to emissions-target penalties, tax credits and exemptions, and incentives in corporate accounting and reporting rules. - For supply, the report recommends national carbon certification programs, subsidies for carbon credit projects and support for carbon-reducing technologies. - Ghana is highlighted for building carbon market regulation that covers both voluntary and Article 6 markets. - Ghana also established a Carbon Markets Office and the Ghana Carbon Registry. - The Republic of Korea is highlighted for a package of measures to promote its domestic voluntary carbon market. - South Korea allows entities in its national emissions trading system to use credits for part of their mitigation commitments. - South Korea also created an ETS trading platform, set up buyer-seller matchmaking for domestic credits, granted a VAT exemption for carbon credit issuance and transfer, and offered targeted grants for mitigation projects.

Between the lines: - The report frames domestic carbon credit markets as a policy tool, not just a trading mechanism. - The emphasis on registry systems, certification and legal clarity suggests investor confidence depends on market infrastructure as much as on demand. - The country examples show that governments can mix regulation, tax policy and public support to stimulate both supply and demand.

What's next: - The report says countries can tailor the measures to their own national circumstances. - Governments are expected to use the policy menu to widen climate finance sources and accelerate progress toward climate and sustainable development goals. - The report argues that stronger domestic markets can help channel finance into priority projects where support is needed most.

The bottom line: - The report's core message is simple: countries wanting more climate investment need clear rules, stronger institutions and policies that make domestic carbon credits easier to buy, sell and trust.