Buyer Coalitions and the Carbon Market: Demand-Side Innovation

Zubin Khera, Roberts Environmental Center at Claremont McKenna College

We invited students from Claremont McKenna College’s Roberts Environmental Center (REC) to provide their perspectives on key issues related to carbon markets. Here is a series of articles they have developed as part of a market research project in which Tradewater participated. These views are theirs and do not necessarily reflect Tradewater’s views — but in the interest of stimulating conversation we think they are valuable to share.

The voluntary carbon market (VCM) is facing a severe oversupply issue, with unretired credits nearing 800 million tCO₂e and issuances historically outpacing retirements by as much as 200 million tCO₂e annually. While high-quality removals remain scarce, lower-integrity credits continue flooding the market. In 2023, this contributed to a 51% drop in transaction volumes even as prices for premium credits surged 82%. This imbalance has led many project developers to delay credit issuances due to pricing and integrity concerns, further complicating market dynamics. As a result, the VCM is increasingly consolidating around buyers willing to pay a premium for vetted, high-integrity offsets, highlighting the urgent need for stronger verification standards and demand-side reforms. 

In response, a new force is emerging: buyer coalitions. These alliances of companies are banding together to aggregate demand, secure high-integrity carbon credits, and send a clear market signal for quality over quantity. Tech giants like Google, Meta, and Salesforce have already pioneered such coalitions through Advance Market Commitments (AMCs), mirroring strategies previously used to accelerate vaccine development. One AMC, Frontier Climate (Frontier), has facilitated over $480 million in carbon removal offtake agreements and has pledged to purchase $1 billion in credits by 2030, proving that coordinated purchasing power can reshape the market landscape.  

As promising as buyer coalitions appear, they raise critical questions: Can they truly address the problem of oversupply? Will they drive meaningful climate action, or simply concentrate market power among a few large players? And perhaps most importantly, do they make sense for smaller companies that lack the financial muscle of Fortune 500 firms? 

What are Buyer Coalitions?

In the evolving landscape of the VCM, buyer coalitions have become pivotal. These alliances consist of companies uniting to pool resources and collectively commit to purchasing substantial volumes of carbon credits.  

A key mechanism employed by these coalitions is the Advance Market Commitment (AMC) which involves buyers pledging to spend a predetermined amount on goods or services that meet certain criteria, thereby guaranteeing a market for high-quality products that are still in development. This strategy has far reaching applications outside of the carbon market, with a proven track record in accelerating vaccine development, most notably through a $1.5 billion AMC launched in 2009 to fund pneumococcal vaccines for low-income countries. Backed by GAVI, the World Bank, and donor governments, this initiative ensured a guaranteed market for manufacturers like Pfizer and GlaxoSmithKline, leading to the delivery of over 230 million vaccine doses and preventing an estimated 700,000 child deaths by 2020. By reducing financial risks for pharmaceutical firms and accelerating production, AMCs helped cut vaccine prices from $100 per dose to under $10, making them accessible in developing nations. In the context of the voluntary carbon market, coalitions like Frontier use AMCs to guarantee demand for high-quality carbon removals, giving project developers the financial security needed to scale innovative technologies and drive down costs. 

Several prominent buyer coalitions exemplify this approach:

GoodCarbon Advance Market Commitments Members & Partners
GoodCarbon Infographic on Notable Buyer Coalitions
  • Symbiosis Coalition: Formed by industry leaders including Google, Meta, Microsoft, and Salesforce, Symbiosis has pledged to purchase up to 20 million tons of nature-based carbon removal credits by 2030. This commitment aims to unlock high-quality ecological restoration projects.
  • Frontier: Backed by companies such as Stripe, Alphabet, Shopify, Meta, and McKinsey, Frontier has established a $925 million AMC to accelerate the scale-up of permanent carbon removal technologies through 2030. Frontier’s substantial financial commitment is designed to lower the costs of emerging carbon capture solutions, making them more viable and scalable.
  • LEAF Coalition: A public-private partnership that unites governments, corporations, and Indigenous communities with the goal of halting tropical deforestation by 2030. LEAF mobilizes significant financial resources to make conservation of tropical forests more economically advantageous than their destruction.

Strengths of Buyer Coalitions: Driving Quality and Market Stability

A persistent challenge in the VCM has been the proliferation of low-quality credits, which undermine market credibility and dilute the impact of carbon offsetting efforts. By enforcing strict procurement criteria, buyer coalitions address this issue by only purchasing credits from projects that have rigorous greenhouse gas impact assessments, transparent reporting standards, and additional environmental or social co-benefits.

This market shift toward high-quality credits is reflected in recent pricing trends. According to Ecosystem Marketplace’s 2023 report, carbon credits associated with verified co-benefits now command a 78% price premium, underscoring growing buyer demand for projects that go beyond simple emissions reduction to support biodiversity conservation, community resilience, and ecosystem restoration. As a result, buyer coalitions act as quality gatekeepers, filtering out low-impact offsets and ensuring that corporate investments support long-term, verifiable climate benefits.

While buyer coalitions do not directly eliminate low-quality credits from registries, their preference for high-integrity credits creates a market disadvantage for developers producing lower-tier offsets. In response, some project developers have begun delaying credit issuances or shifting their focus to align with the new quality expectations set by coalitions like Frontier and LEAF. This shift toward prioritizing high-quality projects is exactly the kind of progress needed in the VCM to ensure credibility, impact, and long-term sustainability.

Beyond shaping supply and demand dynamics, buyer coalitions also help establish best practices and industry benchmarks, making the carbon market more accessible and transparent for buyers. One often overlooked benefit of participating in these coalitions is gaining access to expertise from experienced firms, allowing companies to streamline procurement, enhance due diligence, and develop more effective carbon credit portfolios. The BCG-EDF report highlights that while third-party verifiers once played a central role in educating less mature buyers, large-scale corporate buyers are now setting procurement standards that smaller firms can adopt, reducing uncertainty and ensuring that credit purchases contribute meaningfully to global emissions reductions.

Some companies have even sought to replicate the benefits of buyer coalitions by creating corporate funding pools to co-invest in innovative carbon removal projects without necessarily receiving credits in return. This model lowers the financial barrier for smaller corporate contributors, enabling them to participate in climate-positive investments without committing to long-term procurement contracts. By fostering knowledge-sharing and resource pooling, these initiatives democratize access to high-quality climate solutions, further strengthening the voluntary carbon market.

Will Buyer Coalitions Become More Accessible or More Exclusive?

The rise of buyer coalitions is a double-edged sword for smaller companies. These coalitions could democratize access to high-quality carbon credits by pooling resources, sharing expertise, and lowering transaction costs. However, as large buyers lock in future supply through Advance Market Commitments (AMCs), they may monopolize access to the best offsets, leaving smaller players priced out or forced to settle for lower-quality credits at inflated prices.

Luckily, carbon marketplaces can serve as a valuable resource for these smaller companies seeking to hold onto their agency in purchasing credits of their choice. Platforms like Watershed offer a variety of verified high-value credits that are accessible to smaller companies, enabling them to aggregate demand and participate in AMCs. Through its partnership with Frontier, Watershed allows businesses of various sizes to access permanent carbon removal technologies, ensuring that high-quality credits are not exclusively reserved for the largest buyers.

Whether buyer coalitions drive inclusivity or entrench exclusivity will depend on intentional market design. If they adopt tiered participation models, shared investment funds, or open marketplaces, they could help scale the voluntary carbon market (VCM) for all players. But if they remain closed networks catering only to the highest bidders, they risk concentrating power among a few dominant buyers, edging out smaller companies from competing.

Zubin Khera

Zubin is a sophomore at Claremont McKenna College pursuing a dual BA in Economics and Public Policy. On campus, he works at the Roberts Environmental Center where he finds interest in climate technology development and energy infrastructure. He also enjoys competing on the collegiate Model United Nations circuit discussing topics surrounding sustainability and food waste.

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Permanence

Emission reductions are considered permanent if they are not reversible. In some projects, such as forestry or soil preservation, carbon offset credits are issued based upon the volume of CO2 that will be sequestered over future decades—but human actions and natural processes such as forest fires, disease, and soil tillage can disrupt those projects. When that happens, the emission reductions claimed by the project are reversed.

The destruction of halocarbon does not carry this risk. All destruction activities in Tradewater’s projects are conducted pursuant to the Montreal Protocol , which requires “a destruction process” that “results in the permanent transformation, or decomposition of all or a significant portion of such substances.” Specifically, the destruction facilities Tradewater uses must meet or exceed the recommendations of the UN Technology & Economic Assessment Panel , which approves certain technologies to destroy halocarbons, including the requirement that the technology achieve a 99.99% or higher “destruction and removal efficiency.” Simply put, this means that Tradewater’s technologies ensure that over 99.99% of the chemicals are permanently destroyed. During the destruction process, a continuous emission monitoring system is used to ensure full destruction of the ODS collected.

Accuracy

Some carbon offset projects necessarily rely on estimations or assumptions when calculating the emission reductions from project activities. Forestry projects, where developers make assumptions about the carbon that will be sequestered over future decades if trees are conserved, are a perfect example. Such projects sometimes result in an overestimation of the environmental benefit of the project.

Tradewater’s halocarbon projects avoid the issue of overestimation by consistently conducting extremely precise testing and measurement of the amount of refrigerant destroyed in each project.

  • Every container of ODS that Tradewater destroys is weighed by a third-party using regularly calibrated scales. The ODS is then sampled by a third-party and analyzed by an accredited refrigerant laboratory to determine its species and purity. These two steps combine to ensure that credits are issued only for the precise volume and type of refrigerant destroyed.
  • The destruction facilities that Tradewater uses continuously monitor the incineration process during destruction events to ensure that over 99.99% of the ODS is destroyed. This monitoring is mandated by regulatory protocols and is part of the verification process to which projects are subjected.
  • Tradewater accounts for the project emissions created during the collection, transport, and destruction of ODS, and the number of offsets issued is reduced by a corresponding amount. The protocols that we use also build in other reductions to account for substitute chemicals that will be used to replace the destroyed refrigerants. Tradewater publishes this information in the documentation for all its ODS destruction projects. These documents outline how the material was obtained, the project emissions calculations, the test results, and the amount and type of ODS chemicals destroyed, among other information.

    • Additionality

    It is a basic requirement of all carbon offset projects that the underlying project activities are additional. “Additional” means that the projects would not happen in the absence of a carbon market. Tradewater’s halocarbon projects simply would not happen – and the gases would be left to escape into the atmosphere – without the sale of the resulting carbon offset credits. This is because there is no mandate to collect and destroy these gases. It is still permissible to buy, sell, and use halocarbons that were produced before the ban. There are other reasons halocarbon destruction projects are additional:

    • There are no incentives or financial mechanisms to encourage halocarbon destruction. According to the International Energy Agency and United Nations Environment Program, “there is rarely funding nor incentive” to recover and destroy ozone depleting substances in storage tanks and discarded equipment. And collecting, transporting, and destroying halocarbons is time-intensive and expensive. The burden to collect and destroy these gases therefore remains prohibitive outside of carbon offset markets—meaning that if organizations like Tradewater do not do this work, nobody else will.
    • Countries are not focused on the need to collect and destroy halocarbons. The Montreal Protocol has been celebrated as a success because of its production ban. This success, however, ignores the legacy gases produced before the ban and is a blind spot for government regulators. In the U.S., for example, the Environmental Protection Agency (EPA) developed a Vintaging Model in the 1990s to estimate the quantify of ozone depleting substances left in circulation. Based on the inputs and assumptions put into the model, the EPA predicted that no CFCs would be available for recovery beyond 2020 in the United States. But this prediction did not prove accurate. Tradewater has collected and destroyed more than 1.5 million pounds of CFCs globally in recent years and continues to identify thousands of pounds per week.
    • International carbon accounting standards do not require corporations to measure or track emissions tied to halocarbons, and refrigerants are specifically excluded from Science Based Targets initiative (SBTi) commitments. These commitments derive from emissions reporting under the GHG Protocol, which requires companies to report on emissions only from new generation refrigerants, such as hydrofluorocarbons (HFCs), but does not establish any obligation to report inventories or emissions of refrigerants still in use, such as CFCs and HCFCs. All these factors combine to make Tradewater’s carbon offset projects highly additional. As Giving Green, an initiative of IDinsight, concluded: “Tradewater would not exist without the offset market, so this element of additionality is clearly achieved.” The case for additionality is not so clear for some other project types, such as forestry and landfill gas carbon projects. For example, some forests are already being conserved for their beauty, or for use as parks, and generate carbon offset credits only because those conservation efforts do not yet have full formal protection in place to avoid deforestation in the future. Similarly, methane from landfills can be used to make electricity or captured as compressed natural gas, thereby creating additional revenue streams to support the activities, beyond the sale of carbon credits.