The global carbon market is undergoing a dramatic reset that could transform both supply and costs over the next 25 years. New projections from BloombergNEF (BNEF) suggest that carbon credit supply may grow 20- to 35-fold by 2050, creating one of the most significant financial mechanisms for funding decarbonization. But the shape of this future market hinges on integrity, governance, and the types of projects that ultimately win buyers’ trust.
While the long-term trajectory points upward, the road is being shaped by near-term shifts. From surging issuances to a rapid geographic rebalancing, the market reset is already redefining which sectors and regions are taking the lead.
Carbon Credit Costs Head Higher
BNEF further points to steep increases in average costs as high-quality projects dominate. Prices could reach $60 per ton of CO₂e in 2030 and rise to $104 per ton in 2050 if technology-based removals, such as direct air capture (DAC), dominate the supply mix.
In scenarios where lower-quality credits flood the market, prices would remain significantly lower—just $69 per ton in 2050—but at the cost of weaker governance and reduced impact. This highlights the growing divide between volume-driven growth and integrity-driven supply.
Issuances Surge as Market Resets
According to Sylvera, new credit creation has picked up pace. In Q2 2025, issuances reached 77 million credits, up 39% from Q1 and 14% higher than Q2 2024. This signals renewed confidence among project developers and buyers, with particular momentum in both traditional land-use projects and industrial breakthroughs.
Nature-Based Leaders Face New Competition
Forestry and Land Use projects still dominate, making up 31% of Q2 issuances. Within this group, Afforestation, Reforestation, and Revegetation (ARR) projects stood out. These credits averaged $24 each, reflecting higher implementation costs and buyers’ willingness to pay for premium, nature-based removals. For higher-rated ARR projects (BBB+), the premium stretched closer to $27, driven by limited supply.
Yet the real story this quarter was the surge in Industrial and Commercial projects, which jumped from 7.9% of issuances in H1 2024 to 19% in H1 2025. These include refrigerant recovery, methane capture from coal mines, and advanced industrial efficiency. Meanwhile, REDD+ projects rebounded strongly, climbing to 16% of Q2 issuances, their highest share since mid-2023.
This diversification shows the market moving beyond forests alone, with industrial innovation gaining ground.
North America Rises as Supply Hub
One of the most striking changes came from geography. North America more than doubled its share of issuances, rising from 21% in Q1 to 43% in Q2. This momentum made the American Carbon Registry (ACR) the top registry for the first time, accounting for 33% of all new credits.
It was followed by Gold Standard (25%) and Verra (21%), signaling a more competitive registry landscape. This shift reflects both investor appetite for high-integrity projects in North America and the region’s strong regulatory backdrop, which is creating demand for compliance-grade credits.
Cheap vs. Trusted: The Carbon Market’s Fork in the Road
BNEF outlined the possible futures for the global carbon credit market. Carbon credit supply could follow three different paths, shaped by governance, investor trust, and project quality.
- High-Quality Scenario: If the market reset succeeds, supply reaches 2.6B tons in 2030 and 4.8B in 2050. The market stays smaller but centers on high-impact projects. Direct air capture (DAC) grows to 21% of supply by 2050, with prices averaging $104/ton.
- Full Supply Scenario: If governance fails, supply surges to 5.3B tons in 2030 and 8.2B in 2050. Most credits come from avoided deforestation and reforestation, about two-thirds of the total. Prices stay low at $69/ton, but quality concerns weaken trust.
- OTC Carbon Removal Scenario: This middle path sees bespoke deals growing 27 times since 2022. Supply hits 2B tons in 2030 and 5.3B in 2050. Bioenergy with carbon capture (BECCS) dominates, with prices at $98/ton by 2050.
The trade-off: Cheaper credits risk poor quality, while higher-cost, smaller markets could build the trust buyers want.
Buyers Pay Premium for Integrity
Even as average credit prices softened, buyers continued paying premiums for nature-based removal credits and high-rated projects. For instance, ARR credits rated BBB+ commanded roughly $27 each, compared to lower-rated alternatives.
This price differentiation shows that buyers—especially corporates seeking credible net-zero claims—are prioritizing quality over volume. Credits recognized in compliance systems or international frameworks also commanded higher prices, reflecting their stronger governance.
Carbon Pricing Expands Across Economies
Alongside the voluntary market reset, government-led carbon pricing systems are expanding. As per the World Bank Group, by mid-2025, 43 carbon taxes and 37 emissions trading systems (ETSs) were in place, covering 28% of global emissions—up from 24% just a year earlier.
Several major moves drove this growth:
- China’s national ETS expanded beyond power to include cement, steel, and aluminum, adding 3 billion tons of coverage.
- Colombia broadened its carbon tax to include coal combustion.
Together, these expansions lifted global coverage to nearly 15 billion tons CO₂e, representing two-thirds of global GDP under a direct carbon price.
Power Sector Leads, Industry Joins In
The power sector continues to dominate carbon pricing. Over half of global power emissions—about 30% of global GHGs—are now priced. This matters because electrification of industry and transport can only deliver deep cuts if electricity itself is low-carbon.
Industry is catching up fast. Thanks to China’s ETS expansion, over 40% of industrial emissions are now covered, marking a major leap for one of the most carbon-intensive sectors.
Carbon Markets Channel Private Capital
Despite short-term price softening, demand remains resilient. Corporations remain the biggest buyers through voluntary and domestic compliance markets, viewing credits as essential for net-zero alignment. Global retirements rose in early 2025, driven by a spike in compliance demand.
This reflects carbon markets’ central role: channeling private capital into decarbonization projects while governments pursue broader policy goals like economic development, job creation, and fiscal stability.
The Political Economy of Pricing
The durability of carbon pricing depends not just on policy design but also on public sentiment and perceived fairness. Governments are balancing competing goals—emissions cuts, economic growth, and equity. As seen with China and Colombia, systems are being designed to ratchet up coverage and ambition over time, offering flexibility while building acceptance.
This political economy lens will be crucial as carbon pricing moves into harder-to-abate sectors like heavy industry and as middle-income economies such as Brazil, India, Indonesia, and Türkiye expand their systems.
Outlook: Carbon Market Integrity Over Volume
The global carbon market is no longer defined by raw volume. Instead, the reset since 2022 has pushed integrity to the forefront. Whether through nature-based solutions, industrial projects, or advanced removals, the projects that deliver measurable, durable impact will attract the highest demand and premiums.
What’s clear from BNEF’s forecast on carbon credits supply is that carbon markets will remain a cornerstone of climate finance, one where buyers, governments, and investors increasingly value quality over quantity.
The post Carbon Credits Supply to Skyrocket 35x by 2050 – But at What Price? appeared first on Carbon Credits.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
Net zero is often described as a balancing act: cut what you can, account for the rest, and reach zero on the ledger. That framing is useful, but it leaves something out. It treats every tonne of carbon as interchangeable and every route to zero as equally sound, while the science tells a more specific story.
Malawi has lost a striking share of its forests over the past three decades. Woodlands that once covered well over a third of the country now cover less than a quarter, and the pressure on what remains is increasing. Behind those figures sit two practical questions: what is driving the loss, and what reverses it?
-
Climate Change1 year ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases1 year ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Climate Change2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Climate Change2 years ago
Bill Discounting Climate Change in Florida’s Energy Policy Awaits DeSantis’ Approval
-
Renewable Energy10 months agoSending Progressive Philanthropist George Soros to Prison?
-
Greenhouse Gases1 year ago
嘉宾来稿：探究火山喷发如何影响气候预测
-
Carbon Footprint2 years agoUS SEC’s Climate Disclosure Rules Spur Renewed Interest in Carbon Credits