Consolidation begins to hit the carbon credit market

The carbon credit market is experiencing consolidation amid a softening voluntary carbon market and broader economic uncertainties. Pachama, a carbon management startup focused on nature-based carbon credits derived from forest restoration or preservation, recently laid off staff and is acquiring another carbon credit startup, Carbon Direct. Pachama had raised $88 million from investors including Amazon’s Climate Pledge and notable celebrities, while Carbon Direct, which provides carbon market advisory and accounting services to help companies track and offset their carbon footprints, had raised $60.8 million. The terms of the acquisition were not disclosed. The voluntary carbon market has faced significant challenges, including skepticism about the actual impact of carbon credits. Investigations have revealed that many credits fail to deliver real carbon reductions, largely due to issues like whether protected forests were genuinely at risk of destruction. Additionally, the uncertain geopolitical and economic climate, along with anti-ESG sentiments in the U.S., has led to reduced corporate sustainability budgets, intensifying market corrections. Despite these headwinds, major