What Is the Carbon Market and Why It Matters for Your Business

In the past decade, global warming has become undeniable, threatening ecosystems and human survival. In response, a growing number of companies are seeking ways to reduce and offset their greenhouse gas (GHG) emissions to help prevent environmental disaster — which would ultimately harm their own businesses as well. One of the most relevant tools in this effort is the Voluntary Carbon Market (VCM).

What are carbon credits?

A carbon credit represents the prevention, removal, or reduction of one ton of CO₂ (or equivalent) from the atmosphere. These credits are generated by projects that avoid emissions or promote carbon sequestration — such as reforestation, renewable energy production, and carbon capture and storage.

For example, planting 1,000 eucalyptus trees on one hectare in Portugal can remove approximately 1.5 to 3.2 kg of CO₂ per tree per year through photosynthesis. This would generate between 1.5 and 3.2 carbon credits per hectare annually.

Now imagine a logistics company that emits 1 million tons of CO₂e annually through diesel truck use. It can offset these emissions by purchasing 1 million credits. To generate this amount, between 312,000 and 666,000 hectares of eucalyptus forest would be required each year — showing the economic potential of this market in job creation, taxation, and sustainable growth.

Voluntary vs. Regulated Market

There are two main types of carbon markets:

• Regulated Market (compliance): Mandatory for certain industries or companies, often enforced by law. For example, the EU Emissions Trading System (EU ETS) requires energy and industrial operators to limit or pay for their emissions.
  
• Voluntary Market: Optional participation. Companies buy carbon credits voluntarily to meet environmental commitments, boost reputation, or prepare for future regulations.
  

The voluntary market is especially relevant for businesses not yet legally required to reduce emissions, but wanting to show climate leadership and respond to rising expectations from consumers, investors, and society.

Carbon credit pricing is similar to the auto market: regulated credits are like new cars, and voluntary credits are like used cars. Both markets are connected and influence each other.

The Portuguese Scenario

In early 2024, Portugal made a major move by creating and regulating its own Voluntary Carbon Market, via Decree-Law no. 4/2024. This national system aims to boost market trust and integrity by setting clear rules for project certification and credit issuance.

The Portuguese VCM is currently being implemented — with the government developing approved methodologies and defining the mechanisms needed for transparent and reliable credit transactions.

Why Should Your Business Care?

Participating in the Voluntary Carbon Market can offer your company key benefits:

• Offset residual emissions and work toward carbon neutrality;
  
• Respond to growing expectations from eco-conscious clients and investors;
  
• Differentiate from competitors through responsible environmental practices;
  
• Prepare for potential future legal obligations;
  
• Support local projects and contribute to Portugal’s sustainable development.
  

Additionally, the VCM opens up new opportunities for local project development, job creation, tax revenue, and long-term value generation.Want to learn more?
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