For all the projections around global carbon markets reaching over $1 trillion in value by 2050, most attempts to scale them have fallen short. Billions have been invested, exchanges have come and gone, and yet the system remains fragmented, slow, and difficult to trust. From project developers to corporate buyers, stakeholders are navigating a market that doesn’t work as intended.
Innovo examined why these efforts keep failing. The issue isn’t a lack of ambition, it’s the way the system has been built.
What keeps going wrong:
Carbon markets have developed quickly, but not evenly. Companies across industries are committing to net-zero goals. Governments are tightening disclosure rules. Investors are paying attention to carbon-related risk. All of this is pushing more and more buyers into the voluntary carbon market. At the same time, new types of carbon credits are being developed, from engineered removals to nature-based solutions.
However, despite all of this growth on the surface, the underlying market remains fractured, inconsistent, and hard to trust. Much of the focus and investments go into the ends of the problem. The focus goes into generating more offsets and building more exchanges to sell them. While important steps, they do not solve the root of the problem and leave systems to support the in-between untouched.
What’s missing is the connective infrastructure. This "middleware" is what makes any real market work. Carbon markets currently don’t have something in place to link everything together: from origination to verification, registration to transaction, settlement to reporting. This gap is what has been preventing the market from scaling.
The problem:
Not all carbon credits are created equally, yet there's no standard way to tell them apart. A credit from a direct air capture project, which stores carbon for hundreds of years, is fundamentally different from a forestry project, which is different from an engineered reduction in a hard-to-abate sector. Buyers currently have no clear way to compare them.
Each registry uses its own methodology and reporting standards. Credits are issued with inconsistent metadata. Some include project timelines or social co-benefits; others don’t. Many digital representations of carbon assets not including granular context into a project’s "story", buyers struggle to compare projects or assess the true impact of a credit.
Without standardized, granular data, buyers are left making decisions in the dark. They can't reliably assess quality, compare across projects, or understand what a credit truly represents. That all serves to erode confidence and stalls participation.
Another missing piece is liquidity, or the lack of it. Carbon markets today are fragmented across different geographies, registries, legal structures, brokers, and marketplaces. These players all operate in silos, with different systems and limited interoperability. As a result, trading is slow and manual and participants cannot easily transfer credits. What's left is not a real market, it’s patchwork.
This fragmentation discourages participation and undermines trust. It also makes it nearly impossible to create the kinds of secondary markets that exist in other asset classes. The confusion created by overlapping platforms and inconsistent processes discourages participation and prevents the kind of liquidity needed to scale this industry.
What's missing:
To understand why carbon markets aren’t working, it helps to look at what is working in other asset classes. Financial markets have middlemen to manage risk, ensure delivery, and build trust. Commodities markets rely on standardized contracts, enforceable legal frameworks, and infrastructure that can connect producers, traders, and buyers in real time.
Carbon markets have none of this...yet. There are no shared standards for credit data. No unified interfaces across registries. No real-time settlement rails. Without this infrastructure, no amount of innovation at the edges will make the system function as a real, reliable market.
Carbon Market 2.0:
For carbon markets to scale, buyers need to trust that credits are real, verifiable, and permanent. They need more than new projects and more buyers. They need infrastructure.
This means having clear data structures that allow participants to understand and compare what they’re buying. Information like co-benefits, duration, methodology, and lifecycle emissions needs to be captured and accessible for different assets on registries, marketplaces, and exchanges.
Registries, marketplaces, and service providers should be interoperable, allowing for seamless movement of credits and data. Real-time settlement and consistent record-keeping reduces friction and increase trust.
The infrastructure that supports all of this must be resilient and flexible. It should be able to integrate new technologies, adapt to evolving standards, and scale with demand. It must also be neutral, enabling participants to interact in a safe, efficient, and transparent environment.
In short, it means building the plumbing that makes all of this work. Fix the foundation, so the rest can grow.
This is what we’re solving for at Innovo. We're building the connective layer that helps carbon markets function more like financial markets, with better operability, pricing, and trust. This underlying infrastructure may not be the most visible, but it’s the part that will determine whether the system works and whether it can scale.