The re-election of Donald Trump in November 2024 is poised to reshape the carbon market landscape, especially the voluntary carbon market. Known for his pro-business stance, Trump has often expressed skepticism about mainstream climate policies. However, his administration has shown a commitment to nature-based solutions, focusing on the conservation and protection of American landscapes. This focus on natural resource preservation, rather than on broader climate policy, could shape the voluntary carbon market as corporations and investors look for alternative paths to sustainability.

As investors, we are not political; we deal with realities on the ground and adapt our strategies to align with current policy and market forces. Our focus remains on identifying opportunities within the voluntary carbon market, leveraging our expertise to invest in high-quality projects. With Trump’s return, companies may increasingly turn to the voluntary carbon market to meet Environmental, Social, and Governance (ESG) goals in a deregulated setting. High-quality, nature-based carbon credits — such as those generated from reforestation and land conservation — could gain value as U.S. companies seek verifiable ways to support environmental goals.

This article explores how Trump’s policy approach, combining a conservative stance on climate regulation with targeted support for nature conservation, might drive demand and influence prices in the voluntary carbon market.

Trump’s climate skepticism and market implications

Donald Trump’s well-documented skepticism toward traditional climate policies has been a defining aspect of his approach to environmental issues. Throughout his political career, he has questioned the urgency of climate action and demonstrated reluctance to impose regulations that could impact economic growth. His administration’s withdrawal of the U.S. from the Paris Agreement in 2017 exemplified this stance, as it prioritized economic interests over multilateral climate commitments.

Trump's arrival in the White House introduces potential scenarios with notable effects on international climate policy and carbon market development:

• Oil is in: Trump is a strong supporter of U.S. fossil fuel production and may withdraw from the Paris Agreement again while reversing key climate policies. He’s pledged to open new lands for drilling, expedite permit approvals, and boost natural gas pipelines and liquified natural gas (LNG) exports.
• Renewable energy is out: Trump has stated he’ll scale back the Inflation Reduction Act’s clean energy provisions, a major bill signed by Biden that expanded clean energy. Trump has a record of environmental rollbacks, having reversed or weakened 112 protections, such as limiting wetlands protections and relaxing CO₂ emissions standards.
• Domestic projects favored: Given a lack of government clarity on the role of carbon offsets has been cited for stymying demand for credits, perhaps Trump's "America First" approach to most policies will be a boon for U.S. offset projects, but a bane for those hoping to sell credits to the world's biggest economy. However, the support for domestic carbon offset initiatives is very likely to remain.

Rather than supporting expansive climate frameworks, Trump’s approach highlights selective, nature-based solutions that contribute to environmental goals without enforcing sweeping regulations. This practical conservation focus, combined with minimal regulatory intervention, sets a distinctive policy backdrop. In this environment, the voluntary carbon market — where companies choose to compensate for emissions independently of regulatory mandates — may become increasingly attractive for corporations looking to meet ESG standards within a lighter regulatory landscape.

Trump’s emphasis on nature and conservation

In his previous term, Trump’s commitment to preserving American landscapes became evident through several conservation initiatives. The Great American Outdoors Act, signed in 2020, provided $9.5 billion to restore and maintain national parks and public lands, marking the largest conservation investment in over 50 years. This legislation underscored Trump’s interest in preserving U.S. natural heritage, placing emphasis on public land conservation, tourism, and recreation.

Donald Trump plants a tree at a tree nursery. AI generated picture.

Trump’s support for the Trillion Trees Initiative further demonstrates his preference for practical, nature-based solutions to environmental challenges. This global effort aims to plant and conserve a trillion trees worldwide, a strategy aligned with voluntary carbon markets by promoting nature-based carbon sequestration solutions. Such initiatives foster the growth of projects that contribute to both carbon sequestration and biodiversity, potentially increasing the demand for high-quality, nature-based carbon credits.

By fostering domestic conservation projects, Trump’s policies could boost demand for voluntary carbon credits linked to U.S.-based natural resource initiatives. These credits appeal to corporations and investors focused on sustainable growth, offering an opportunity to offset carbon emissions while supporting the conservation of valuable landscapes.

Corporate Social Responsibility and ESG goals amid deregulation

While Trump’s administration is expected to favor a lighter regulatory approach, corporations are still under mounting pressure to align with ESG standards, regardless of government policy. Public companies, institutional investors, and consumers increasingly expect companies to demonstrate environmental responsibility. For many corporations, fulfilling carbon-neutral pledges and ESG commitments is crucial to maintaining credibility among stakeholders.

• Continued demand for voluntary carbon credits: Even if environmental regulations are relaxed, companies are likely to uphold their sustainability goals, which remain central to Corporate Social Responsibility (CSR). As organizations seek verifiable ways to compensate for emissions, demand in the voluntary carbon market is expected to grow, increasing the need for high-quality carbon credits.
• Reputation and brand value: With sustainability tightly linked to brand reputation, companies are prioritizing carbon credits to enhance credibility and trust among consumers. This consistent demand for credible carbon credits may drive up prices, especially for those credits tied to verified, high-integrity projects.
• Sector-specific reliance on carbon credits: Industries with high emissions, such as manufacturing, transportation, and energy, may increasingly depend on voluntary carbon credits to maintain their ESG standing. As a result, demand for high-quality, verifiable carbon credits will likely rise, pushing up prices in the voluntary market.

The need to uphold ESG and CSR standards is expected to sustain demand for voluntary carbon credits, providing a way for companies to address environmental goals, even with limited regulatory intervention.

Discover more: Why carbon credits' prices will rise?

Emerging markets and new opportunities for carbon projects

Trump’s pro-business approach to energy independence and economic growth could encourage U.S. companies to seek cost-effective carbon compensation projects internationally. Emerging markets — particularly in Asia, Africa, and Latin America — offer lower project costs and substantial environmental benefits, creating new opportunities for impactful carbon offset projects.

• Cost-effective carbon offset projects abroad: U.S. corporations seeking economical carbon offsets might turn to international projects, particularly in regions where initiatives offer both environmental and social benefits. These projects can provide impactful results at lower costs, offering competitive advantages for companies seeking ESG-aligned investments.
• Nature-based solutions for carbon sequestration: Nature-based solutions such as reforestation, soil carbon sequestration, and habitat restoration are highly valued in the voluntary market for their ability to capture carbon while promoting biodiversity and benefiting local communities.
• Positive impact on local communities: Many carbon credit projects in emerging markets contribute to local economies by creating jobs, improving infrastructure, and fostering sustainable practices. These projects align with Trump’s pragmatic approach to economic growth, presenting compelling stories for ESG-minded investors.

Investment in emerging market projects could drive up the value of voluntary carbon credits, especially those with dual environmental and social benefits, making them attractive to both corporations and investors.

Donald Trump poses in a lush green forest . AI generated picture.

Trump on Africa and its impact on the voluntary carbon market

Trump’s re-election may signal an economic-driven approach to Africa, which could indirectly influence the voluntary carbon market. His administration’s policies toward Africa have emphasized economic partnerships, security interests, and investment over aid. This approach opens opportunities for carbon markets through initiatives that prioritize business investment and sustainable development.

• Economic and security focus: Trump’s stance on Africa is grounded in economic and security interests. This focus could benefit the voluntary carbon market as U.S. companies look to invest in impactful projects that align with Africa’s development goals, including carbon projects tied to reforestation, renewable energy, and sustainable agriculture.
• Business investment over aid: Trump’s “Prosper Africa” initiative encouraged American investment across African economies, promoting private-sector engagement in sustainable projects. As the voluntary carbon market turns to Africa for cost-effective compensation projects, U.S. companies may be incentivized to invest in projects that support carbon sequestration, benefitting both investors and local communities.
• Reducing external influence: Trump’s focus on reducing foreign influence, particularly from China, could incentivize American companies to invest in African carbon compensation projects. This may also help companies meet ESG goals while strengthening U.S. trade partnerships.

Africa’s potential as a player in the voluntary carbon market is promising. With Trump’s investment-oriented approach, the continent may see increased capital flow into high-quality carbon projects, supporting both environmental sustainability and economic growth. Africa’s lower project costs and high-impact potential make it an ideal region for voluntary carbon initiatives, potentially driving up demand and prices for carbon credits.

Long-term price implications for the voluntary carbon market

Trump’s policies may reduce compliance requirements, but the voluntary market is likely to thrive as corporations and investors sustain demand for verifiable carbon credits. The combination of corporate commitments, strong investor interest, and enhanced transparency is expected to create sustained upward pressure on voluntary carbon credit prices.

• Quality-driven price differentiation: An emphasis on quality and integrity may lead to price differentiation, with higher-quality credits commanding a premium while lower-quality credits stagnate.
• Sustained demand for credible offsets: Companies with reputational stakes in sustainability are likely to prioritize high-quality offsets, sustaining demand and pushing up prices.
• Market confidence in stability: Trump’s policies that foster a business-friendly and conservation-oriented environment could stabilize the investment climate for the voluntary carbon market, boosting investor confidence.

Investor confidence and the growing appeal of voluntary markets

Investors have shown strong interest in the voluntary carbon market, with trillions of dollars directed toward ESG-focused funds and sustainable investments. Trump’s re-election could further boost this trend, as his policies may give companies the flexibility to innovate in carbon offset solutions without stringent compliance costs. This added flexibility may make voluntary carbon credits more appealing to investors, especially as more companies strive to meet sustainability goals.

From a carbon market perspective, EY, McKinsey, and BCG, alongside Morgan Stanley, which all anticipate a multi-fold expansion, suggest a market value ranging from $30 billion to $50 billion by 2030. The more optimistic outlooks from Goldman Sachs and Wood Mackenzie forecast a market size of $100 billion by 2030, indicating potential for exponential growth if the right conditions and commitments persist. A conservative projection comes from PwC, estimating growth of up to $30 billion by the same year — still a 10-fold growth compared to today’s $3 billion market. The consensus across all price and market predictions is the rapid and substantial growth of the market, marking it as a promising long-term investment opportunity. 

Projected growth of VCM demand, graph.

Discover more: 3 Key insights of the voluntary carbon market for 2024

“Making nature great again?”

In summary, Trump’s re-election presents a complex yet promising landscape for the voluntary carbon market and nature-based solutions. His policies may reduce compliance pressure, but his emphasis on conserving American natural resources and fostering business-friendly environments can bolster voluntary carbon markets. 

While Trump’s direct comments on Africa, carbon markets, nature, and trees are nuanced, his policies show a preference for conservation, economic partnerships, and voluntary solutions over regulatory mandates. His emphasis on nature conservation and reforestation initiatives suggests potential support for nature-based solutions within the voluntary carbon market framework. 

The combination of corporate responsibility, investor interest, nature-based solutions, and enhanced verification technologies is expected to drive up the demand for, and ultimately the price of, voluntary carbon credits. With a focus on nature, responsibility, and innovation, the voluntary carbon market is poised to flourish, creating both environmental benefits and financial opportunities. Therefore, at the end of the day, the re-election may make nature great again.