The voluntary carbon market made great strides in early 2025. strong growth. This is fueled by record credit retirements, a focus on integrity, and increased interest in carbon removals compared to traditional avoidance credits.
We have studied newly published reports from two credible research agencies, namely Sylvera and CEEZER. Both say that organizations are now willing to invest more in credits that deliver real climate impact. Thus, the market is shifting from quantity to quality, and the numbers support this. Let’s deep dive.
Carbon Credit Retirements Reach a New Peak
Carbon credit retirements hit 95 million in the first six months of 2025, the highest total ever recorded for a half-year. This marks a 9% increase compared to H1 2024. More importantly, total retirement value jumped by 32%, indicating that buyers are not just retiring more credits—they’re paying more for the right ones.
This increase reflects a clear preference for verified high-quality credits. Buyers are becoming more selective and placing climate integrity at the forefront.
Supply is Growing, But Demand Is Growing Faster
On the supply side, carbon credit issuances rose to 77 million in Q2 2025, a 39% increase from the previous quarter. This represents a 14% boost compared to Q2 2024.
Yet even with more credits available, retirements continue to outpace issuances. If this trend holds, this year could see negative net issuance for the first time. However, this imbalance can inevitably put pressure on developers to meet demand for high-integrity credits. As companies pursue long-term climate targets, they seek more than low-cost offsets.
Quality Becomes a Core Priority
Data shows buyers are moving up the quality ladder. In H1 2025, 57% of Sylvera-rated credits retired had BB ratings or higher, up from 52% in all of 2024. This shift is driven by better due diligence tools, clearer carbon credit ratings, and initiatives like the ICVCM’s Core Carbon Principles.
Market participants are becoming more informed and aligning purchases with ESG goals, climate science, and regulations. Buyers now choose credits with intention instead of blindly purchasing.
CORSIA Spurs Growth in Compliance-Eligible Credits
The Sylvera report further emphasizes that more than 37% of credits issued in Q2 2025 could be eligible under Phase 1 of CORSIA, the global offsetting scheme for international aviation.
- This is a notable increase from 28% in the same period of 2024. This alignment with international standards is closing the gap between voluntary and compliance markets.
Full CORSIA eligibility depends on host country authorizations under Article 6 of the Paris Agreement. The cancellation deadline for Phase 1 is January 2028, and developers are closely watching national authorities’ responses.
The Market Shifts Toward Durable Carbon Removals
One key trend of 2025 is the strong shift toward carbon removals. CEEZER data shows a 102% increase in the share of removal credits transacted compared to last year. Buyers are prioritizing long-term impact over short-term avoidance.
Spending patterns reflect this shift. The average spend per ton across all credit types has more than doubled, rising 2.2 times year-on-year. For removals specifically, prices have increased by 3.2 times. This premium reflects interest in projects with lasting impact, such as biochar, mineralization, and reforestation.
Companies are now focusing on credits in Oxford Category 5, representing durable removals with low reversal risk, rather than Category 4 credits, which carry higher long-term uncertainties.
Nature-Based Credits in Demand, But Supply and Standards Remain a Challenge
Nature-based projects like ARR (Afforestation, Reforestation, and Revegetation) are attracting premium prices. On average, ARR credits are selling for $24 per ton in the primary market. For credits with BBB+ ratings, prices can reach up to $27. However, these credits only make up 3.7% of total retirements, indicating high demand but limited supply.
This supply-demand gap is prompting developers to increase high-quality nature-based removal projects. However, challenges like land access, cost, and long verification timelines still hinder expansion.
Moving on, REDD+ projects, aimed at reducing deforestation and forest degradation, rebounded in Q2 2025. Their share rose from 3% in Q1 to 16%, the highest since Q2 2023. Still, scrutiny remains over outdated REDD+ methodologies, many of which may not meet ICVCM’s integrity standards.
This uncertainty is pushing buyers to explore alternatives like waste management, biogas, and improved forest management, where credibility and transparency are easier to achieve.
North America Leads Issuance Growth
Significantly, North America has become a major player in carbon markets, doubling its share of new issuances to 43% in Q2 2025. This growth propelled the American Carbon Registry (ACR) to the top spot among registries, holding a 33% share. Gold Standard followed at 25%, and Verra at 21%.
This surge reflects stronger project pipelines, clearer regulations, and confidence in the U.S. market’s ability to meet both voluntary and compliance criteria.
Industrial and Commercial Credits Gain Market Share
Carbon credit projects from industrial and commercial sectors are quickly gaining traction. In H1 2025, these projects accounted for 19% of new issuances, up from just 7.9% during the same time in 2024. These include initiatives like refrigerant recovery, methane capture, and energy efficiency upgrades.
These scalable, technology-driven projects are becoming popular alternatives to traditional forestry and land use projects. As demand grows, industrial credits are expected to capture a larger share of the market.
Tech and Services Drive Up Carbon Removal Demand
The CEEZER report also highlighted that professional services and tech sectors are emerging as key players in carbon removal. Professional services firms now account for 24% of the total retirement value in 2025. The tech and IT sector has seen a 61% jump in retirement value for removals, the highest growth rate of any sector this year.
These industries align decarbonization with business values, helping shape the next phase of the market.
Greenhushing Begins to Decline
Many companies used to quietly retire credits. This trend is known as “greenhushing.” However, things are changing. CEEZER’s Greenhushing Index tracks these anonymous retirements. It peaked at 42% during the 2024 U.S. elections. By Q1 2025, it fell to 35% and then to 23% in Q2.
This decline indicates growing buyer confidence. Companies are becoming more transparent, using credit retirements to showcase their climate leadership.
So, Is Integrity the New Standard for the Carbon Market?
Data from H1 2025 shows the carbon market is growing. Buyers are now focusing on credits that offer long-term benefits instead of offsets. With PACM credits coming later this year and high-integrity standards becoming standard, 2025 could establish new benchmarks for credibility and performance.
As demand and quality expectations increase, developers and registries will feel more pressure to deliver. The voluntary carbon market is aligning more with compliance markets. It is becoming a key tool for global climate action.
Allister Furey, CEO at Sylvera, summarized:
“Demand for credits and, in particular, high-quality credits is at an all-time high. At the same time, increasing use of project-based credits in compliance schemes is narrowing the gap between voluntary and compliance markets. Meeting both higher climate integrity standards, as evidenced by ratings, and eligibility criteria for schemes, like CORSIA, is being seen as essential for new projects in development. Market alignment with both integrity and regulatory expectations is starting to unlock the potential of carbon markets to deliver genuine climate impact at lower economic costs.”
If this trend continues, 2025 won’t just break records; it could redefine how the world values the carbon removal market.
The post Carbon Removal in 2025: Are You Investing in the Right Climate 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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