The Impact of the Voluntary Carbon Market on Portugal’s Carbon Neutrality

Portugal’s path toward carbon neutrality by 2050 faces complex challenges that demand innovative and complementary solutions. While the Regulated Carbon Market (EU ETS – European Emissions Trading System) establishes the regulatory pillars of decarbonization, the Voluntary Carbon Market (VCM) is emerging as a key instrument to accelerate the country’s energy and environmental transition. This analysis explores how the VCM can act as a catalyst for national climate goals, creating synergies with regulated mechanisms and promoting broader and more inclusive climate action.

Portugal, with its ambition to achieve carbon neutrality by 2050 and reduce emissions by 55% by 2030 compared to 1990 levels, requires flexible instruments that complement the regulatory obligations of the EU ETS. The VCM offers precisely this flexibility, enabling companies, institutions, and citizens to actively participate in decarbonization through voluntary carbon offsetting mechanisms.

The structure of the Portuguese VCM can be particularly effective due to the country’s geographical and ecological characteristics. The vast Atlantic coastline, Mediterranean forests, mountainous ecosystems, and traditional agricultural areas create unique opportunities for carbon sequestration projects that go beyond simple emissions offsetting.

The EU ETS, as a compliance mechanism, imposes strict obligations on industrial facilities and the energy sector but has limitations in addressing diffuse emissions and sectors not covered by regulation. The VCM fills these gaps, enabling small, medium, and large enterprises in agriculture, forestry, mining, and communities to contribute to national decarbonization goals.

This complementarity is particularly relevant for sectors such as agriculture, which accounts for around 10% of national emissions but lacks appropriate regulatory mechanisms within the EU ETS. The VCM allows sustainable agricultural practices—such as soil carbon sequestration through mineralization in soils or mining waste, biochar production, and organic waste management—to be rewarded through the generation of carbon credits, creating economic incentives for ecological transition.

The Portuguese VCM has the potential to democratize climate action by engaging actors traditionally excluded from regulatory mechanisms. Financial institutions can neutralize their operational emissions, companies can go beyond compliance, and citizens can directly offset their carbon footprint, with actions ranging from tree planting to replacing combustion-engine cars with electric vehicles.

This voluntary involvement fosters a culture of climate responsibility that transcends legal obligations, laying the foundation for a deeper and more lasting transition. International experience shows that countries with robust voluntary markets tend to exceed their regulatory targets, as voluntary action generates innovation, awareness, and positive pressure for more ambitious policies.

Examples of “Carbon+” Projects in Portugal

Forest Biodiversity Protection

Forest conservation projects in areas such as Serra da Estrela or the Arrábida Natural Park can generate carbon credits while protecting critical habitats and promoting endemic biodiversity. These “Carbon+” projects not only sequester CO₂ through forest preservation and regeneration but also safeguard threatened species such as the Iberian wolf, the wildcat, and various endemic birds.

Rural Community Development

Biochar initiatives in rural Portuguese communities represent a paradigmatic example of “Carbon+” projects. These initiatives convert agricultural residues into biochar, generating carbon credits while providing additional income for farmers, revitalizing rural economies, and improving soil quality. Communities in regions such as Trás-os-Montes or Beira Interior can economically benefit from the valorization of their forest and agricultural residues.

Coastal and Marine Conservation

Projects for the conservation of coastal ecosystems—such as dunes, salt marshes, and seagrass meadows—offer unique opportunities for Portugal. These ecosystems are highly efficient in sequestering carbon (“blue carbon”) while providing co-benefits such as coastal erosion protection, habitats for migratory birds, and improved water quality.

Regenerative Agriculture

Regenerative agriculture programs in regions such as Alentejo can combine soil carbon sequestration with improvements in agricultural biodiversity, water conservation, and healthier food production. These projects create value for farmers while contributing significantly to national climate goals.

The Voluntary Carbon Market represents a transformational opportunity for Portugal to accelerate its transition to carbon neutrality. It is also a chance for the country to lead by example and build companies that can become European and global leaders in this field. By complementing the EU ETS regulatory framework and promoting voluntary climate action, the VCM can mobilize additional resources, innovation, and citizen engagement in the fight against climate change. 

The emphasis on “Carbon+” projects that generate environmental and social co-benefits aligns perfectly with Portuguese values of territorial cohesion, environmental protection, and sustainable development. As Portugal advances its commitment to carbon neutrality, the VCM emerges not just as a financial instrument but as a catalyst for a more inclusive, innovative, and effective energy and ecological transition. To learn more, register for our free Carbon Market Webinar (Sept 10) or our Forestation Methodology Webinar (Sept 17).