New Guide Helps Policymakers Safely Test Carbon Market Innovations

LAGOS, Nigeria, March 30, 2026 /PRNewswire/ -- The Clean Cooking Alliance (CCA) and the Voluntary Carbon Markets Integrity Initiative (VCMI) today released a new global guide: "Regulatory Sandbox to Support Carbon Markets: A How-To Guide for Regulators and Policymakers on Testing Carbon Market Innovations." The guide is supported by FSD Africa and was launched in conjunction with the "West Africa Financial Institutions Carbon Markets Training," an event hosted by FSD Africa in partnership with the West African Alliance on Carbon Markets and Climate Finance, taking place 30 March-1 April in Lagos.

The guide, produced as part of VCMI's Access Strategies Program, is designed to help governments and financial authorities test and refine carbon market regulations in a controlled, evidence-based way.

Carbon markets hold significant potential for financial innovation and growth. Voluntary carbon markets are projected to reach US$ 5–20  billion by 2030 and US$ 60–270 billion by 2050. However, carbon markets are constrained by structural challenges such as inconsistent credit quality, limited transparency, high transaction costs, and regulatory uncertainty. These obstacles undermine market confidence and limit the flow of capital to high-impact climate-mitigation projects. However, there is a lot that regulators can do to reduce such risk and create a positive enabling environment for investors, buyers, and project developers. 

To support the establishment of regulatory frameworks that balance financial innovation, environmental integrity, and risk protections for investors and consumers, CCA and VCMI have developed a guide on the use of regulatory sandboxes: a practical tool that allows governments to trial regulatory approaches to carbon finance before committing them to law.

Regulatory sandboxes provide controlled live environments for testing innovations such as carbon-credit linked bonds, securitized carbon transactions, blockchain carbon registries, AI-driven monitoring systems, and tokenized credits while maintaining environmental integrity and investor protection.

"Carbon markets hold significant opportunities for climate-positive growth in emerging markets and developing economies, but accessing growing demand for carbon credits requires specialist knowledge and tailored policies and regulations that have been tested in real world contexts," said Mark Kenber, Executive Director of VCMI. "This guide provides policymakers with a transformational tool to drive innovation in carbon markets, while upholding environmental and social integrity through robust oversight. This can help EMDEs to accelerate credible climate finance solutions and position themselves as investment-ready sources of high-quality carbon credits."

The guide provides a step-by-step framework for designing and implementing regulatory sandboxes tailored to national legal and institutional contexts. It offers practical guidance on how to assess the impact and safety of innovations while managing risks, including through governance mechanisms, risk controls, stakeholder roles, and technical considerations.

"Innovation in the clean cooking sector is advancing rapidly, and regulatory clarity will be critical to unlocking investment," said Dymphna van der Lans, CCA CEO. "Regulatory sandboxes give policymakers a practical way to test new approaches, build confidence, manage risk, and protect the integrity of carbon markets."

"With many countries across Africa aiming to develop their carbon markets and become investment-ready, this guide offers timely and practical guidance to help financial institutions regulators develop carbon regulations that fit country contexts," said Reshma Shah, Carbon Markets Lead at FSD Africa.

While the guide draws on practical experience from carbon markets linked to clean cooking and household energy access, it is intentionally designed for broad applicability across countries, technologies, and carbon market segments. It builds on previous work by CCA, including a report and policy brief on "Financial Regulatory Pathways for Scaling Carbon Markets."  Collectively, these resources are guiding CCA's ongoing support to regulators in Kenya, with similar efforts underway in Nigeria.

"Unlocking carbon finance is vital for climate resilience and sustainable development across West African countries and communities," said Ousmane Fall Sarr, Coordinator of the West African Alliance on Carbon Markets and Climate Finance. "This resource  can help regulators build and test the necessary enabling conditions for market growth." 

The "Regulatory Sandbox to Support Carbon Markets" guide is intended for:

• Capital markets authorities
• Financial regulators
• Central banks
• Climate finance innovators
• Carbon project developers
• Economic development partners

The guide is now publicly available in English and will soon be available in French.

Download the guide here.

About the Clean Cooking Alliance
The Clean Cooking Alliance (CCA) works with a global network of partners to build an inclusive industry that makes clean cooking accessible to the 2.1 billion people who live each day without it. Established in 2010, CCA is driving consumer demand, mobilizing investment to build a pipeline of scalable businesses, and fostering an enabling environment that allows the sector to thrive. Clean cooking transforms lives by improving health, protecting the climate and the environment, empowering women, and helping consumers save time and money.

About the Voluntary Carbon Markets Integrity Initiative
The Voluntary Carbon Markets Integrity Initiative (VCMI) is an international non-profit committed to realizing the full potential of high-integrity voluntary carbon markets (VCMs). VCMI's mission is to empower companies, governments, and non-state actors to maximize their climate impact through the use of high-quality carbon credits.

The 'Regulatory Sandbox to Support Carbon Markets' guide was produced as part of VCMI's Access Strategies Program, which supports host countries, regions, and sectors to participate in high-integrity carbon markets and unlock the environmental, social, and economic benefits of carbon finance within national climate plans. This program is instrumental in building the necessary infrastructure for countries to participate meaningfully in and benefit from the global carbon market.

About FSD Africa
FSD Africa is a specialist development agency established in 2012 by the UK Government working to make finance work for Africa's future. FSD Africa works on the ground in over 30 African countries to mobilise "green plus" finance that will power economic and social development while delivering environmental gains and building Africa's resilience. FSD Africa works on policy and regulatory reform, capacity strengthening and improving financial infrastructure, and addressing systemic challenges in Africa's financial markets to spark large-scale and long-term change.

SOURCE Clean Cooking Alliance