The government’s recent announcement of support for voluntary carbon and nature markets effectively offers a “warrant of fitness” to signal which markets can be trusted, without directly regulating them.

The aim is straightforward. By giving investors, landowners and developers confidence, the government hopes to unlock private finance for projects that reduce emissions or restore ecosystems.

As Associate Minister for the Environment Andrew Hoggard put it:

The pressures on nature and climate are bigger than the public purse.

The pressures on nature and climate are bigger than the public purse.

But voluntary markets are based on self-imposed targets and governed by a patchwork of organisations. The credibility of climate claims in voluntary carbon markets has already been repeatedly challenged internationally.

This raises the deeper question of whether the government can create a credible framework by relying on externally developed standards in a lightly regulated system, or whether it risks outsourcing key decisions about environmental integrity.

How voluntary markets work

Carbon markets allow organisations to buy and sell “credits” representing reductions or removals of greenhouse gas emissions. In compliance markets – such as New Zealand’s Emissions Trading Scheme – participation is required by law, and governments set the rules.

Voluntary carbon markets are different. In these markets, businesses and individuals choose to buy credits to meet self-imposed climate targets or demonstrate environmental responsibility.

They are not governed by a........

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