The global carbon credit market has grown from a small environmental tool into one of the most powerful weapons against climate change. As businesses, governments, and investors push toward net-zero targets, carbon credits are helping balance emissions, finance green projects, and speed up the shift toward sustainability.
According to Astute Analytica, the market was valued at US$1,142.40 billion in 2024 and is projected to reach US$4,983.7 billion by 2035, growing at a compound annual growth rate (CAGR) of 18%.
This rise reflects the worldwide momentum toward carbon pricing, stronger climate pledges, and rapid growth in both voluntary and compliance carbon markets. In 2023 alone, more than 155 million carbon credits were retired, while 258 million credits were traded worldwide.
Why Carbon Credits Are Becoming Essential
Carbon credits allow companies to offset their emissions by funding projects that either remove carbon from the air or prevent new emissions. Examples include forest restoration, renewable energy installations, and methane capture. These credits are now a key component of climate strategies, as regulations are tightening and more companies are making net-zero commitments.
Major financial support is driving strong growth in the carbon credit market. In 2024, the U.S. Department of Energy committed $2.5 billion to boost carbon credit projects. In just the first quarter of 2025, investors put over $1 billion into carbon capture startups.
Furthermore, IEA predicts, globally, carbon capture capacity is set to exceed 100 million tonnes per year by 2025. However, to meet climate goals, it needs to multiply 100 times more by 2050.
Corporate Net-Zero Pledges Fuel Demand
One of the biggest forces behind rising demand is corporate climate action. Companies are increasingly committing to net-zero targets, and carbon credits play a vital role in reaching those goals. In 2023, corporations bought and retired at least 161 million credits to meet their sustainability goals.
At present, the energy sector is the largest buyer, followed by financial services. Internal pricing systems are also taking off, with over 400 companies implementing an internal carbon price to guide investments in decarbonization.
Nature-Based Solutions Take the Lead
Among all categories, nature-based solutions have become the backbone of the carbon credit market. Projects like reforestation and afforestation are especially popular because they not only capture carbon but also support biodiversity and local communities.
Their credibility is reinforced by organizations such as SBTi and the Carbon Credit Quality Initiative (CCQI), which push for strict verification standards and transparency.
Technology-Driven Carbon Removals: The New Frontier
Technology-based carbon removal is emerging as a promising long-term investment. In early 2024, 6.7 million tons of CO2 removal had already been contracted through long-term agreements.
These methods, such as Direct Air Capture (DAC), come at a high price—around US $600 per ton in 2023—but corporations see them as essential for permanent carbon removal. For example, Frontier, backed by Stripe, Alphabet, and Meta, has pledged over US$1 billion for permanent carbon removal projects.
Tech giant Microsoft has also contracted more than 5 million tons of carbon removal. Projects like Climeworks’ Mammoth DAC plant, which went online in 2024 and captures 36,000 tons of CO2 annually, prove that this technology is commercially viable.
Aviation Regulations Drive Strong Demand
The aviation sector is another major growth driver. Under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), demand is expected to reach 64 to 158 million credits in 2025.
The aviation compliance market, known as CORSIA, is emerging as a major driver of carbon credit demand. Between 2024 and 2026, demand is expected to reach 101–148 million credits.
Regional Trends in Carbon Trading
The carbon credit market is global, but demand is concentrated in certain regions.
- North America leads with 66.8 million credits retired in 2023, followed by Europe at 52.4 million credits.
- Asia is quickly catching up, retiring 28.1 million credits in 2023, signaling growing participation.
- Europe remains the largest market, driven by its European Union Emissions Trading System (EU ETS)—the most established compliance market worldwide.
- Asia Pacific is seeing the fastest growth, especially in China, South Korea, and Australia, thanks to national trading schemes and a large industrial base.
- Latin America and Africa are becoming key suppliers, with vast forests and renewable energy resources supporting offset projects.
Key Players in the Carbon Credit Market
Several organizations are leading the development, verification, and trade of carbon credits.
- 3Degrees, South Pole Group, Finite Carbon, Terrapass, Moss.earth – Project developers and brokers.
- Verra, Gold Standard – Verification bodies ensuring credibility.
- Xpansiv, Pachama – Digital platforms bringing transparency and data tracking.
These players are shaping the infrastructure needed to scale carbon credit markets globally.
Despite these, the carbon credit market still faces hurdles despite its rapid growth. Buyers demand proof that credits deliver real, lasting emission cuts, especially after greenwashing scandals. Prices swing sharply by project type and location, adding uncertainty.
Fragmented regulations across regions also slow global harmonization and limit smooth market expansion.
Blockchain and the Future of Carbon Credit Trading
One of the biggest opportunities for the carbon credit market lies in blockchain technology. By recording transactions in a secure, unchangeable way, blockchain can prevent fraud, improve transparency, and make trading more efficient. Combined with data analytics, it can track every detail of a transaction and ensure credibility.
This technology could also create new jobs in carbon accounting and analytics while making credits more attractive to investors.
Emerging Trends in Blockchain and Carbon Credit Tracking
An analysis showed, this year, over 60% of new carbon credit platforms adopted blockchain, particularly in agriculture and forestry. It was for enhancing transparency, speeding verification, and preventing double issuance. The future of blockchain in carbon credit tracking is shaping up as follows:
- Regulatory Alignment: Global authorities are likely to adopt blockchain standards, ensuring uniformity and trust in carbon markets.
- DAO-Driven Markets: Blockchain-based Decentralized Autonomous Organizations (DAOs) will enable community-led governance and rapid response to market and climate shifts.
- Remote Verification: Satellites, drones, IoT, and AI will provide continuous remote monitoring, simplifying certification and cutting costs.
- Micro-Credit Access: Fractional and micro-credit trading will let smallholders and local projects participate in global carbon finance.
Blockchain-powered, multi-tech ecosystems are set to make carbon credit tracking secure, transparent, and scalable, supporting the push toward net-zero.
- ALSO SEE: The Energy Debate: How Bitcoin Mining, Blockchain, and Cryptocurrency Shape Our Carbon Future
The post Are Nature-Based Solutions and Blockchain the Future of Carbon Credits? appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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