The global carbon market is changing fast in 2026. The latest insights from Sylvera’s State of Carbon Credits report show a clear shift. Volumes are falling, but value is holding steady. This means buyers now focus more on quality than quantity.
Furthermore, the market is splitting into two clear segments. High-quality credits are in demand and sell at higher prices. Older or lower-quality credits are losing interest. This divide is growing stronger and shaping how the market will evolve in the coming years.
Shell’s Sharp Cut Pulls Down Market Volumes
Carbon credit retirements reached 51 million in the first quarter of 2026. This is down from 55.3 million in the same period last year. The total market value also fell slightly to $290 million, compared to $309 million a year ago.
Despite this decline, prices did not weaken. The average price per credit increased to $5.69 from $5.60. This shows that buyers are willing to pay more for credits they trust.
Interestingly, a major reason for the drop in volumes was reduced activity from Shell. The company sharply cut its purchases. It retired just 494,000 credits in Q1 2026, compared to 6.7 million in Q1 2025 and 5.6 million in 2024. This single change had a large impact on the overall market.
Value Now Drives the Market
The carbon market now runs on a simple idea. Value matters more than volume. Buyers want credits that deliver real environmental impact. They prefer projects with clear data, strong verification, and proven results.
High-quality credits now define the market. These credits meet strict standards and often align with compliance systems. Because of this, they command higher prices and stronger demand.
This shift is also linked to the rise of compliance markets. Programs like CORSIA are increasing demand for reliable credits. As a result, voluntary buyers and compliance buyers now compete for the same supply.
Experts expect this trend to grow stronger. Compliance demand could surpass voluntary demand by 2027. This will increase pressure on supply and push premium credit prices higher.
The report highlighted that, investment-grade credits (BBB+) now command an average of $20.10 per credit in Q1 2026, up from $18.10 in Q1 2025, as shown in the image below:
Recap of 2025 Carbon Market
Compliance programs made up 24% of total retirements in 2025. According to Sylvera, this share is rising fast. It is expected to go beyond voluntary demand by 2027. This growth is mainly driven by CORSIA Phase 1 rules and the expansion of domestic carbon markets.
This means compliance demand is set to change the carbon market in a big way. Soon, both voluntary buyers and regulated systems will compete for the same high-quality credits. This is already making supply tighter and more competitive.
At the same time, international trading under Article 6 gained momentum. In 2025, around 20 new bilateral agreements were signed, and the first large-scale carbon credit trades took place. This shows that global carbon transfer systems are now becoming active in practice.
However, the system is also becoming more complex. One key factor is “corresponding adjustments,” which now decide whether a credit is fully acceptable in compliance markets. In addition, countries like China, Japan, Brazil, and Indonesia are building their own domestic carbon systems.
These systems are expected to create strong new demand, but they also add more rules and complexity to the market.
Supply Crunch Becomes the Key Challenge
However, Sylvera has flagged a different scenario for his year. Supply is now the biggest issue in the market. High-quality credits are becoming harder to find. Many credits exist, but not all meet strict requirements.
Furthermore, the main bottleneck is coming from approvals under Article 6. These rules govern international carbon trading. Delays in approvals mean many credits cannot yet enter the market. Now this creates a gap. Supply looks strong on paper, but usable supply remains limited. This shortage keeps prices firm and supports premium credits.
CORSIA Supply Expands, But Not Enough
There has been progress in aviation supply. Eligible credits under CORSIA reached 32.68 million. This is more than double last year’s level.
These credits come from major registries like Verra, Gold Standard, and ART TREES. However, supply still falls short in practice. Not all credits meet full compliance standards. This keeps the market tight and competitive.
Moving on, the question is what’s driving market growth.
Cookstoves Drive Market Growth
Cookstove projects are growing quickly. Their share increased from 17% in 2025 to 26% in Q1 2026. Africa leads this segment. Around 80% of the supply comes from the region. Most of these projects also meet compliance requirements under CORSIA.
Quality is improving in this category. Developers are moving away from older methods. They now use stronger, data-driven approaches. This shift improves trust and attracts more buyers.
Other projects:
- REDD+ Regains Trust: Forestry projects under REDD+ are making a comeback. Their share of retirements rose to 25% in Q1 2026. These projects faced heavy criticism in the past. However, new rules and better standards are restoring confidence. Updated methodologies have removed weaker credits. This has improved the overall quality of supply. Global policy clarity has also helped. Buyers now have more confidence in using REDD+ credits in compliance markets. This has supported demand.
- Waste management projects: They are growing in importance, and their share reached 10% of total retirements, the highest so far. Landfill methane projects are leading this growth. These projects are easier to measure and verify. They also meet compliance standards. Buyers are now exploring options beyond traditional sectors. Waste projects offer a reliable and practical solution.
New Credit Types Expand the Market
Several new project types are growing fast. They are adding fresh supply and attracting new buyers.
- Clean water projects have seen strong growth in recent years. They now produce millions of credits annually. Marine and mangrove projects are also gaining attention. They offer strong environmental benefits and long-term carbon storage.
- Industrial projects focused on nitrous oxide reduction are expanding as well. These projects are highly measurable and align well with compliance systems. At the same time, regenerative agriculture is growing at the fastest pace. It has moved from almost no activity to millions of credits in a short time.
These new categories are helping the market grow. However, quality remains the key factor that drives demand.
Buyers Shift Toward Better Credits: Regional Analysis
Buyer behavior is changing across regions. The United Kingdom is leading the move toward high-quality credits. Companies are under pressure to show real climate action. This has pushed them to choose better credits.
The United States and Canada are also improving. Buyers prefer projects that meet both voluntary and compliance standards. This supports demand for high-quality supply.
North America Sets the Benchmark
North America sets the benchmark for quality. A large share of its credits meets high rating standards. This strong quality supports higher prices. The average price reached $14.80, the highest globally. Strong domestic demand and strict standards drive this trend.
On the other hand, South America is seeing strong demand but limited new supply. This creates pressure in the market. Prices have slightly declined to $11.50. However, the quality mix is improving. Waste projects are helping fill the gap left by falling forestry supply.
- Europe remains the largest market by volume. However, the quality mix is still uneven. Some buyers continue to use lower-rated credits.
- Japan and South Korea focus on lower-cost options like hydropower. This keeps their share of high-quality credits low. In Latin America, buyers often choose local projects. Limited regulatory pressure keeps the quality demand weaker.
- Africa is moving toward better quality. High-rated supply is increasing, while low-rated supply is falling. As explained before, cookstove projects are the main driver. At the same time, lower-quality forestry projects are declining. This improves the region’s overall market position.
- Asia faces weaker market conditions. Supply has dropped sharply due to fewer renewable energy projects. The average price stands at $5.30, the lowest globally. Demand remains steady but lacks strong growth. This keeps prices under pressure.
Indonesia Stands Out in Asia
Indonesia is a bright spot in the region. Credit prices have risen strongly in the past year. High-quality peatland projects are driving this growth. International deals under Article 6 are also adding value. These factors attract buyers looking for reliable credit.
This shows how strong quality and supportive policies can boost market performance.
Final Take: Quality Defines the Future
The carbon market in 2026 is clear and focused. Quality now drives demand, pricing, and growth. Buyers are becoming more selective. They want credits that are verified, reliable, and compliant.
Supply remains tight, especially for high-quality credits. At the same time, compliance markets are growing. This increases competition and pushes prices higher.
The gap between high- and low-quality credits will continue to widen. In simple terms, the market is no longer about how many credits exist. It is about how good they are.
- READ MORE: Top Carbon Credit Companies to Watch in 2026
The post Carbon Market 2026: Supply Squeeze Pushes Premium Carbon Credit Prices Up, Sylvera Finds appeared first on Carbon Credits.
What auditors actually test, where projects actually fail, and the contract clauses that protect you before signature.
The meeting happens about fourteen months after the contract was signed. Your assurance provider has reached the nature-based investment line in your Scope 3 file, and the partner across the table has exactly two questions. How do you know the reductions happened? And how do you know they would not have happened anyway?
The first question is MRV: measurement, reporting, and verification. The second is additionality. Between them, they decide whether your nature-based investment counts, in your inventory, in your disclosure, and in front of your board. Everything else in the project documentation is supporting material for these two answers.
This article walks through what each question actually tests, where projects most commonly fail, what digital MRV has changed (and what it has not), and the contract clauses that protect you. The goal is to give you the diligence framework before you sign, because after the credit issues is the wrong time to discover the answers were weak.
What MRV actually verifies
MRV is the machinery that turns a field intervention into a defensible number. Measurement covers the data: biomass surveys, soil sampling, remote sensing, activity records from participating farms. Reporting covers the translation of that data into claimed reductions under a recognised methodology. Verification covers the independent check: an accredited third party tests the reporting against the methodology and the evidence.
The methodologies live in registries. Verra’s Verified Carbon Standard and the Gold Standard are the two largest for nature-based projects, and each publishes the methodology documents, monitoring requirements, and verification protocols that a project must follow. The ICVCM Assessment Framework now sits above the registries, assessing whole methodologies against the Core Carbon Principles and granting the CCP label to those that pass.
For a buyer, the practical questions are concrete. What is the monitoring frequency, and is it specified in the project design document or left vague? Who is the verifier, how were they selected, and how often do they rotate? What raw data do you, the buyer, get access to, and in what format? A project that answers these in writing is a different procurement than one that answers them in a sales call.
What additionality actually proves
Additionality asks whether the intervention caused the reduction, or whether the reduction would have happened anyway. The test is a counterfactual: what would this landscape, this farm, this forest have done without the project’s money?
Three forms matter in practice. Financial additionality asks whether the project needed the carbon revenue to proceed. Regulatory additionality asks whether the activity was already required by law. Common-practice additionality asks whether the activity is already standard in the region, in which case paying for it buys you nothing the world was not getting for free.
The reason additionality dominates audit conversations is recent history. Research published in 2023, including the Science paper examined at length in our piece on conventional offsets and boardroom credibility, found that a large share of REDD+ credits failed the counterfactual test because baselines were inflated. The market response was a wave of methodology revisions at Verra and the arrival of independent ratings agencies whose entire business is re-testing additionality claims. The Carbon Credit Quality Initiative publishes transparent scoring of methodologies on exactly this dimension, and it is free to consult before you sign anything.
Where projects most commonly fail the test
Five failure modes account for most of the wreckage.
- Inflated baselines. The counterfactual assumes more deforestation, more degradation, or lower yields than the evidence supports. The claimed reduction is the gap between reality and the baseline, so an inflated baseline manufactures reductions from nothing.
- Unaccounted leakage. The project protects one forest and the logging moves to the next valley. The methodology is supposed to net this out; weak projects estimate it optimistically.
- Thin permanence protection. Nature-based carbon can reverse: fire, pest, drought, or a change of landowner. Buffer pools and insurance mechanisms exist for this, but their adequacy varies enormously between projects.
- Attribution and double counting. In supply chain settings, the same reduction can be claimed by the supplier, the buyer, and a credit purchaser unless contracts prevent it. Our Insetting vs Offsetting piece covers the inventory rules; the point here is that the auditor will ask who else is counting this tonne.
- Stale monitoring. Data collected at validation and never refreshed. The IPCC AR6 Working Group III land-sector chapter documents how quickly carbon stocks respond to disturbance; a three-year-old measurement is a historical artifact, not a current claim.
What digital MRV changes, and what it does not
Digital MRV is the genuine improvement in the field. Satellite remote sensing, including the free archives at NASA Earthdata, allows biomass and land-cover change to be monitored continuously rather than at multi-year verification intervals. Soil carbon models calibrated with physical sampling reduce the cost of agricultural measurement. The practical effect is more frequent data at lower cost, which compresses the window in which a problem can hide.
What digital MRV does not change is judgment. Baselines are still human decisions about counterfactuals. Additionality is still an argument, not a measurement. Research groups such as the Oxford Smith School have been clear on this point: better sensors improve the M in MRV, but the integrity questions live in the assumptions, and assumptions need governance, not gadgets.
For a buyer, the test is simple. Ask the provider what is measured by instrument, what is estimated by model, and what is assumed by methodology. A provider who can answer that question crisply understands their own evidence chain. A provider who cannot is selling you their confidence rather than their data.
What to require in your contract
The diligence above converts into five contract clauses.
- Monitoring cadence and buyer data access, specified by dataset and frequency.
- Verifier independence, named accreditation, and rotation terms.
- Baseline revision triggers, so the counterfactual updates when the methodology or the evidence changes.
- Reversal liability and buffer adequacy, with the mechanism named and sized.
- Documentation handover in audit-ready form, so the evidence file your assurance provider needs already exists.
None of these clauses is exotic. All of them are absent from weak contracts, and their absence is the most reliable early signal that the MRV and additionality answers will be weak too.
If you are evaluating a nature-based investment and want the MRV and additionality stress-tested before signature rather than after, the carbon and sustainability experts at Carbon Credit Capital can run that review against any project on your shortlist, and design nature-based supply chain investments where the evidence chain is built audit-first. Schedule a consultation.
Sources and further reading
- ICVCM: Core Carbon Principles Assessment Framework
- Verra: Verified Carbon Standard
- Gold Standard for the Global Goals
- Carbon Credit Quality Initiative: Methodology quality scores
- University of Oxford Smith School: Sustainable finance research
- IPCC AR6 Working Group III, Chapter 7: AFOLU
- NASA Earthdata satellite remote sensing archive
EU Directive: Empowering Consumers for the Green Transition (ECGT)
The EU Directive, Empowering Consumers for the Green Transition (ECGT), takes effect on September 27, 2026.(1) The goal of ECGT is to protect consumers by ensuring that environmental claims are fair, understandable, and reliable. This regulation does create a new compliance requirement for businesses, but it also provides sustainability and marketing teams with important guidance that helps create consistency in sustainability communications.
Key takeaways
- ECGT takes effect September 27, 2026, and prohibits claims that a product or service has a neutral, reduced, or positive environmental impact based on offsetting alone.
- Named example phrases the regulation prohibits include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint.
- ECGT does not want to deter investment in carbon credits. It wants companies to communicate the real benefits of the projects they support instead.
- SBTi’s guidance recommends framing carbon credits as taking responsibility for ongoing emissions, not as making a product or company neutral.
- Voluntary carbon projects deliver real climate progress: reducing super-pollutants, protecting and restoring ecosystems, and supporting communities.
Regarding carbon credits specifically, voluntary carbon projects deliver important climate progress and environmental benefits that provide many talking points for companies. They reduce climate super-pollutants by removing industrial emissions like methane, N2O, HFCs and others. They protect and restore valuable ecosystems and carbon sinks like forests, mangroves and grasslands. They help communities by reducing local pollution, creating employment opportunities, improving access to healthcare, and more.
The Science Based Targets Initiative (SBTi), a global leader in business climate action, concludes that alongside aggressive decarbonization, we should also use high quality carbon credits to take responsibility for our ongoing emissions. SBTi recognizes that carbon credits are important “to help limit temperature overshoot, mitigate transition risks, and support climate solutions.”(2)
ECGT language on carbon offsetting says that they do not want to deter investment in carbon credits. They just want companies to focus on communicating the benefits of the projects they support and avoid claims beyond the scope of carbon credits, which is good for everyone, companies and consumers alike.
The regulation reinforces that carbon credits do not change the sustainability of your products, so carbon credit buyers should not suggest that their products are more sustainable because of carbon credits. Instead, companies need to promote their climate contributions as a way to compensate or take responsibility for their carbon emissions by supporting projects that do great things like reducing global carbon emissions, reducing pollution, preventing deforestation, restoring forests, and more.
ECGT language related to carbon offsetting
The regulation is particularly focused on prohibiting claims, based on offsetting greenhouse gas emissions, that a product or service has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions. These claims are prohibited in all circumstances because they mislead consumers into believing the claim relates to the product itself, or to how it was made and supplied, or into thinking that using the product carries no environmental impact at all.
Named examples of prohibited claims include:
- climate neutral
- CO2 neutral certified
- carbon positive
- climate net zero
- climate compensated
- reduced climate impact
- limited CO2 footprint
These claims are only allowed when they rest on a product’s actual lifecycle impact, not on offsetting emissions outside that product’s value chain, since the two are not equivalent. This prohibition does not stop companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they present that information in a way that is not misleading and that meets the other requirements of Union law.(1)
SBTi also provides guidance on climate contribution language in its Corporate Net Zero Standard Version 2.0 Draft for Second Public Consultation, November 2025. While the SBTi language is fairly technical, it has a good framework for crafting a climate contribution message.
SBTi Language for Carbon Credits(3)
- Take responsibility for ongoing emissions by delivering mitigation impact contributions
- Carbon credits certify the mitigation outcomes of projects that reduce, avoid, or remove carbon emissions
- Activities that reduce emissions from emission sources not located within the company’s value chain
- Activities that conserve, protect, and enhance natural carbon sinks
- Activities that capture and store carbon in storage pools
SBTi’s draft standard also walks through sample claim language for this kind of contribution. In general, the samples move from a simple percentage statement, to naming a specific verified tonnage tied to that percentage, to a fuller statement that breaks the tonnage into reductions versus removals. Across all three, the framing stays consistent: a company took responsibility for a defined share of its ongoing emissions over a set period, by funding a specific, verified amount of mitigation, achieved through emission reductions or removals.(3)
FAQ: ECGT and Carbon Credit Claims
When does the ECGT directive take effect?
The rules apply across the EU from September 27, 2026, after member states transposed the directive into national law by March 27, 2026.
Does ECGT ban carbon offsetting?
No. It bans specific marketing claims that a product or service is environmentally neutral, reduced impact, or positive based on offsetting. Advertising investment in carbon credit projects themselves is still allowed if it is not misleading.
What phrases does ECGT specifically prohibit?
Named examples include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint, when those claims are based on offsetting rather than a product’s actual lifecycle impact.
How should a company describe its carbon credit purchases instead?
SBTi’s guidance recommends stating the specific verified tonnage of emissions reductions or removals funded and describing that as taking responsibility for a defined share of ongoing emissions, rather than claiming the company or product is neutral.
Does this rule apply to company level sustainability claims too?
ECGT is focused on claims about specific products and services in consumer marketing. Broader company level sustainability communication is a separate matter still governed by other existing rules.
While ECGT does add a new compliance burden for businesses, it helps create consistency in sustainability messaging that is important to building confidence in voluntary carbon projects and scaling the industry to help us achieve progress on global carbon emissions.
Disclaimer: Terrapass does not provide legal or regulatory advice. Any interpretation of regulation must be approved by your legal representative.
References:
(1) https://eur-lex.europa.eu/eli/dir/2024/825/oj
(2) https://files.sciencebasedtargets.org/production/files/Corporate-Net-Zero-Standard-version-2.pdf
(3) https://files.sciencebasedtargets.org/production/files/CNZS-V2-Second-Consultation-Draft.pdf
The post The EU’s New Green Claims Rules and Carbon Credits appeared first on Terrapass.
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