The global carbon credit market reached a clear turning point in 2025. Volumes declined. Prices rose. Buyer behavior shifted. Policy signals strengthened. At the same time, long-term commitments surged through record-breaking offtake deals.

These changes show a market moving away from scale at any cost. Instead, quality, integrity, and compliance eligibility now shape value. This article reviews the major trends that defined the carbon credit market in 2025 using various industry reports and explains what they mean for 2026 and beyond.

Why 2025 Marked a Turning Point for the Carbon Credit Market

For much of the past decade, growth in the voluntary carbon market was driven by volume. More credits were issued. More were retired. Prices stayed low. Quality concerns often came second.

That model no longer holds.

In 2025, total credit retirements fell to about 168 million tonnes, down 4.5% year on year, according to Sylvera report. New issuances also declined, reaching roughly 270 million tonnes, the lowest level since 2020. On the surface, this looks like a contracting market.

Yet market value moved in the opposite direction. Total spending on carbon credits rose to around $1.04 billion, up from about $980 million in 2024. The average price paid increased to roughly $6.10 per credit.

This shift matters. It shows that market growth is no longer tied to volume alone. Instead, it is driven by higher prices for credits seen as credible, durable, and compliant with future rules.

The reports point to two forces driving this change. First, buyers are paying more for higher-quality credits. Second, compliance-driven demand is starting to reshape the market. Together, these forces signal a transition toward a more structured and selective market.

Supply, Demand, Issuances, and Retirements: What Really Changed in 2025

The balance between supply and demand changed in important ways during 2025.

On the supply side, issuances declined across several major project types. Renewable energy credits saw the sharpest drop. These projects have long faced questions around additionality. Many buyers now see them as low impact. As a result, fewer new renewable credits entered the market.

Nature-based credits still dominate total volumes. Forestry and land-use projects remain the largest source of issued and retired credits. However, within this category, the mix is changing.

Buyers are moving away from older REDD+ projects and toward improved forest management, afforestation, reforestation, and agriculture-based projects. Allied Offsets data show the following mix:

On the demand side, retirements fell slightly, but this does not signal weakening interest. Corporate demand remained stable in terms of buyer count. What changed was how companies bought credits and what they were willing to pay.

Importantly, compliance use now accounts for about 23% of all retirements. Programs in California, Quebec, South Africa, and Chile contributed to this growth. This share is expected to rise as new compliance systems scale up.

Another key signal comes from inventory data. Credits rated BBB or higher have been in deficit since 2023. In 2025, this deficit continued for a third straight year. At the same time, lower-rated and unrated credits remained heavily oversupplied. Unrated credits alone added an estimated 88 million tonnes to inventory in 2025.

This split highlights a structural imbalance. The market does not lack the credits overall. It lacks the credits that buyers trust.

Nature, Tech, and Removals: The Credit Mix Evolves

The mix of credit types continued to rotate in 2025, reflecting buyer concerns about integrity and future eligibility.

• Nature-based credits

Nature-based credits still make up the majority of market activity. However, not all nature credits are treated equally.

Legacy REDD+ projects lost market share. High-profile integrity concerns reduced buyer confidence. Prices weakened for lower-rated REDD+ credits. In contrast, well-rated afforestation and reforestation (ARR) projects gained ground. Buyers showed a clear preference for projects with stronger monitoring, permanence, and land tenure controls.

Agriculture-based credits also expanded. These projects often offer measurable co-benefits for soil health and livelihoods. Buyers increasingly value these attributes.

• Technology-based avoidance credits

Credits from renewable energy projects continued to decline. Waste management, landfill gas, and industrial efficiency projects filled some of this gap. These projects often face lower additionality risks and clearer baselines.

• Carbon removal credits

Carbon removal credits remain a small share of current retirements. In 2025, durable removals accounted for well under 1 million tonnes of issuances and retirements.

Yet removals are central to the market’s future. This is most visible in the forward market. Most large offtake deals focus on durable carbon removal, such as direct air capture, biochar, BECCS, and enhanced mineralization.

The CDR-focused report highlights why. Net-zero targets increasingly require removals to address residual emissions. Avoidance credits alone are not enough. This structural demand explains why removals command much higher prices and long-term commitments.

Prices, Quality Premiums, and What Buyers Are Paying For

Headline prices only tell part of the story.

In 2025, the average spot price was around $6.10 per credit. But actual prices varied widely by project type, rating, and co-benefits.

Afforestation and reforestation credits traded anywhere from $2 to over $50. Half of the ARR credits fell between $5 and $25. REDD+ credits showed similar dispersion but at lower levels. Quality became the main driver of these differences. For the first time, ratings were clearly embedded in pricing.

ARR projects rated BBB or higher averaged about $26 per credit. Lower-rated ARR projects averaged closer to $14. Unrated projects traded even lower. A similar pattern appeared in REDD+ credits.

Co-benefits added another layer. Projects with strong biodiversity or community outcomes earned clear price premiums. Buyers were willing to pay more for credits that delivered visible social and environmental value beyond carbon.

In the forward market, prices looked very different. Offtake agreements signed in 2025 implied average prices of around $160 per credit. These prices reflect the high costs and limited supply of durable removals, not spot market conditions.

• MUST READ: Carbon Credit Offtakes Surge in 2025: What the $12B Says About the Future Market?

The result is a two-tier market. One tier is a fragmented spot market with wide price ranges. The other is a concentrated forward market built around high-integrity removals.

Investments and Movers: Who’s Driving the Market

Private investment in carbon removal companies between 2021 and 2025 reached approximately $3.6 billion, with direct air capture (DAC) attracting the largest share of capital over that period.

However, investment activity contracted in 2024 and continued into 2025, even as offtake deals expanded. This highlights a gap between commercial commitments and early‑stage funding scaling.

Major Corporate Buyers and Retirees

Corporate engagement shapes much of the 2025 retirement landscape. Several household names emerged as significant purchasers and retirees:

• Microsoft remained the single largest buyer of carbon removal credits, accounting for over 90% of removal volume in the first half of 2025.
• Energy and utility firms accounted for a sizable portion of total retirements, as indicated in broad market data on retiree sectors.
• While comprehensive ranked data for all major buyers in 2025 is not fully disclosed publicly, MSCI analysis of prior data indicates that energy companies, transport firms, and services sectors have historically been among the top retirees when disclosure is available.

Regional retirements also suggest significant corporate participation from Asia, Europe, and North America. This reflects global corporate climate commitments. 

Offtake Spotlight: Forward Deals Speak Louder Than Volumes

Offtake agreements were one of the clearest signals of future market direction in 2025.

The total value of offtake deals announced during the year reached about $12.25 billion, up from roughly $4 billion in 2024. This is more than 12 times the value of credits retired in the spot market.

Yet the volumes involved remain modest. These deals are expected to deliver around 10 million credits per year through 2035. That is less than 10% of current annual retirements.

This gap matters. It shows that buyers are willing to commit large sums to secure limited volumes of high-quality supply. A small group of buyers dominates this space. Microsoft alone accounted for the vast majority of durable removal offtake volume in 2025.

• SEE MORE: Microsoft More Than Doubles Carbon Removal Deals to 45 Million Tonnes in 2025

These agreements serve two purposes. They secure future supply in a tight market. They also send strong price signals. If even a fraction of spot market demand shifts toward similar quality thresholds, total market value could grow significantly without higher volumes.

Integrity Meets Policy: Compliance and Ratings Reshape Value

Integrity concerns shaped much of the market’s evolution in 2025.

Buyers are no longer satisfied with claims alone. Ratings, improved methodologies, and third-party assessments now influence decisions. This shift is reinforced by policy.

Compliance and voluntary markets are converging. Credits that can meet compliance rules often command higher prices. This is especially true for credits eligible under CORSIA or aligned with ICVCM’s Core Carbon Principles.

In 2025, nearly half of all credits issued came from methodologies potentially eligible for CORSIA. This share continues to rise. At the same time, Article 6 moved from theory to practice. Twenty new bilateral deals were signed in 2025, bringing the total to over 100 agreements.

Moreover, corresponding adjustments emerged as a central issue. Credits with a corresponding adjustment are now clearly differentiated from those without. This distinction affects pricing, eligibility, and long-term demand. Some analysts expect corresponding adjustments to become a tradable element of the market.

Policy signals also strengthened corporate demand. Draft updates to the SBTi Net-Zero Standard clarified how credits can be used alongside emissions reductions. This reduced uncertainty for buyers planning long-term strategies.

The Outlook for 2026 and Beyond

The near-term outlook points to a tighter and more complex market.

In 2026, supply constraints for high-quality credits are likely to persist. New issuances are not rising fast enough to meet demand for BBB+ credits. Prices for trusted nature-based projects are likely to remain firm or increase.

Compliance demand will continue to grow. Modeling suggests compliance use could exceed voluntary demand as early as 2027, driven by CORSIA Phase 1 and expanding domestic systems. By the mid-2030s, domestic compliance markets could become the largest source of demand.

Carbon removal credits will remain scarce in the short term. Actual retirements will lag commitments. However, investment and offtakes signal strong long-term growth. As methodologies mature and costs fall, removals will play a larger role in both voluntary and compliance settings.

The carbon credit market in 2025 did not collapse. It restructured.

For the market as a whole, the direction is clear. Volume alone no longer defines maturity. Quality, integrity, and policy alignment do. Buyers became more selective and prices began to reflect integrity. Policy moved closer to implementation. Offtake deals revealed long-term expectations.

The carbon credit market of 2026 and beyond will likely be smaller in volume than past projections, but higher in value, more regulated, and more closely tied to real climate outcomes.

• FURTHER READING: Top Carbon Credit Companies to Watch in 2026

The post The Carbon Credit Market in 2025 is A Turning Point: What Comes Next for 2026 and Beyond? appeared first on Carbon Credits.

In Cape Town, a carbon credit issuance from restored grasslands has quietly set a global precedent. The Grassland Restoration and Stewardship in South Africa (GRASS) project has issued 266,255 verified carbon units, becoming the first project worldwide to earn the Climate, Community and Biodiversity (CCB) label under Verra’s updated VM0042 methodology.

Developed by carbon project specialist TASC, the initiative focuses on degraded grasslands managed largely by communal livestock farmers. These landscapes, often overlooked by investors, now sit at the centre of a high-integrity carbon model that could shape how future African projects are designed and judged.

South Africa’s Grasslands Face a Quiet Crisis

Grasslands cover vast areas of South Africa. Around 34 million hectares support livestock farming, forming one of the country’s most important rural economies. Yet decades of overgrazing, unmanaged fires, and weak institutional support have taken a heavy toll. Roughly a third of these grasslands are now severely degraded.

Climate change has intensified the pressure. Droughts are more frequent. Rainfall is less predictable. Soil health has declined. Productivity has suffered. Communal farmers, who collectively own about half of South Africa’s livestock, remain marginalised in formal markets. Despite their scale, they supply only around 9 percent of national meat output.

This gap reflects structural barriers rather than a lack of land or labour. Limited access to training, veterinary services, finance, and consistent routes to market has locked many farmers out of value chains. GRASS was designed to work within these realities, not around them.

How the GRASS Project Works

GRASS is built around improved grassland and livestock management. The project applies regenerative practices such as adaptive grazing, better fire management, and active monitoring of soil and vegetation. These changes help rebuild grass cover, increase soil carbon, and improve the resilience of rangelands.

The project operates as a group model. Multiple Project Activity Instances, or PAIs, can join under a single framework. The first PAI focuses on communal livestock farming systems, where land tenure is complex and collective decision-making is essential. More recently, TASC expanded the project to include private, commercial farmers.

Significantly, GRASS was the first project registered globally under Verra’s VM0042 methodology, which is specifically designed for improved agricultural land management. This methodology requires detailed soil carbon measurement and includes safeguards to prevent emissions leakage. It reflects the latest thinking on how to quantify carbon outcomes from land-use change credibly.

A Landmark VCU Issuance Under Stricter Rules

During its first monitoring period from 2021 to 2023, GRASS generated 266,255 verified carbon units across more than 95,000 hectares of communal rangeland. The area overlaps with nine key biodiversity zones, including parts of the Maputaland-Pondoland-Albany hotspot.

What makes this issuance special is the CCB label. It confirms that the project delivers measurable climate benefits while also supporting communities and biodiversity. Under the updated VM0042 rules, GRASS is the first project to earn this combined certification.

For buyers, this matters. They want credits that are real, long-lasting, and socially responsible. GRASS meets these standards through strong monitoring and transparent governance.

Community Livelihoods at the Centre

During the first monitoring period, about 4,000 communal farmers joined GRASS and helped manage the land that generated the initial credits. Nearly 300 people also gained work in ecological monitoring, grazing support, and fire management, which matters in areas with few formal jobs.

Carbon revenues flow through a community trust, ensuring income reaches local communities instead of being captured by developers. While carbon payments alone are not transformative, they help cover the costs of improved land management.

Market access has driven much of the project’s early impact. Through a partnership with Meat Naturally Africa, farmers received training and gained access to mobile auctions and abattoirs. These linkages generated about ZAR56.4 million (roughly $3.35 million) in additional revenue from livestock and wool sales, helping households stabilize income amid rising climate risk.

Employment, Skills, and Local Resilience

As GRASS expanded, it created around 900 jobs across communal rangelands, with nearly one-third held by women. Roles include ecological rangers, grazing coordinators, and data collectors.

The project builds technical skills locally, offering training in fire management and invasive species control. This helps protect ecosystems and reduces the need for outside contractors.

GRASS also works through existing communal governance structures. By strengthening local decision-making and ensuring transparent benefit sharing, it lowers the risk of conflict—an issue that often affects land-based carbon projects in Africa.

• READ MORE: Microsoft Buys 2 Million Tons of Carbon from Rubicon Carbon’s Uganda Forestry Project

TASC is Scaling Grassland Restoration Without Losing Integrity

Today, GRASS spans about 950,000 hectares of communal and private rangeland, placing it among the largest grassland restoration initiatives globally. The communal component alone covers more than 600,000 hectares and is expected to expand to one million hectares over time.

TASC plans to scale the project to two million hectares by 2030. At that level, GRASS could sequester or avoid nearly two million tonnes of carbon dioxide equivalent each year. Over its 100-year commitment period, the project targets the mitigation of around 14 million tonnes within its first 30 years.

These figures are modest compared to national emissions. However, they highlight the cumulative potential of land-use interventions when applied consistently and at scale. They also show that community-managed landscapes can meet some of the world’s most demanding carbon standards.

What This Means for African Carbon Markets

Many African countries see carbon markets as a source of climate finance. Yet progress has been uneven. Concerns over land rights, benefit sharing, and long-term stewardship have slowed investment. Some projects have promised more than they delivered, eroding trust.

The South African grasslands example offers a different path. It shows that community-led projects can achieve high-integrity certification while delivering measurable economic returns locally. It also demonstrates that rigorous methodologies and social safeguards need not limit scale.

As scrutiny of voluntary carbon markets intensifies, examples like GRASS may shape future expectations. Buyers, regulators, and communities alike are shifting their focus from promises to outcomes. Projects that cannot show real climate, social, and biodiversity benefits may struggle to find support.

In that context, GRASS stands out. Not as a silver bullet, but as proof that carbon finance, when designed carefully, can restore ecosystems, strengthen rural livelihoods, and deliver credible climate mitigation at the same time.

• READ MORE: Unlocking Zambia’s Carbon Market: Miombo Woodland Restoration to Remove 2M Tonnes of CO₂ Annually 

The post Why South Africa’s Verra-Certified Grassland Carbon Credits Matter for Voluntary Markets appeared first on Carbon Credits.

A Canadian carbon management company, DevvStream Corp., and a United Arab Emirates (UAE) investment platform have joined forces to launch a new climate investment vehicle. The goal of the partnership is to build a US$100 million fund by the end of 2027 to invest in environmental assets. These include carbon solutions, decarbonization, and technologies that support the global energy transition.

The new vehicle, called the Fayafi x DevvStream Investment Platform, seeks to bring in capital. It will help scale impactful projects in various carbon and climate initiatives. DevvStream’s carbon asset know-how and Fayafi’s financial strength will team up. They will build a global investment engine for environmental infrastructure and carbon solutions.

Inside the Fayafi–DevvStream Investment Platform

DevvStream and Fayafi Investment Holding Limited, based in the Dubai International Financial Centre (DIFC), have signed an investment agreement. They will create a jointly governed special purpose vehicle (SPV).

The SPV’s main objective is to pursue scalable, high-impact decarbonization opportunities. It is targeted to reach $100 million in capital commitments by 2027, though this remains a non-binding target rather than a guarantee.

The vehicle will focus on several areas, including:

• Environmental infrastructure,
• Carbon credit solutions and monetization,
• Climate-related technologies

Fayafi is expected to hold 80% of the economic interest in the SPV, while DevvStream will hold 20%. Most profits from investments and carbon credit revenues are expected to go to Fayafi. The rest will be distributed to DevvStream.

An Investment Committee with representatives from both partners will review and approve funding decisions. A Fayafi representative will serve as Chair of this committee. DevvStream will charge a one-time setup fee once the platform is approved. It will also receive ongoing consulting fees based on a percentage of assets used in the fund.

Why This Deal Matters for Carbon Markets

The launch of the Fayafi x DevvStream Investment Platform comes at a time when carbon markets and environmental assets are gaining traction. More companies, governments, and investors want to fund climate solutions. They are looking for options beyond just cutting emissions. Projects related to carbon capture, carbon markets, clean energy, and decarbonization infrastructure are drawing interest from a wider set of financial players.

DevvStream itself specializes in handling, aggregating, and monetizing environmental assets such as carbon credits and renewable energy certificates. This lets the company handle and create climate investments within larger sustainability plans.

Carbon credits are units that represent a reduction or removal of greenhouse gas emissions. They can be bought and sold in voluntary and compliance markets.

Carbon credit demand is set to rise. Companies aim for net-zero targets, and regulators are tightening rules on climate reporting and carbon offsets.

The chart shows the projected global carbon credit market size from 2025 to 2050. The green range shows lower and upper bounds, reaching $50–$250 billion by 2050 (2024 prices). Growth depends on demand: high demand with loose supply drives the market to the upper bound, while low demand with loose supply results in the lower bound.

Another projection says it could reach up to $270 billion by 2050. This prediction of market growth reflects the rising corporate demand for nature-based and technology-based environmental asset solutions. DevvStream and Fayafi are building platforms to tap into this growing market. They focus on linking finance with clear climate results.

• SEE MORE: Carbon Credit Market Heads Toward $270 Billion by 2050 as Quality Reshapes Demand

DevvStream’s Expanding Role in Climate Assets

DevvStream started in 2021. It focuses on carbon management and monetizing environmental assets. The company works across three strategic domains:

1. Carbon offset portfolios: including nature-based, tech-based, and carbon sequestration credits for sale to corporations and governments.
2. Project investment and acquisition: helping to extend its reach into broader environmental markets.
3. Project development services: where it structures and manages eligible climate and sustainability activities in exchange for a percentage of generated credits.

This model allows DevvStream to provide full support, from project development to monetization. By teaming up with Fayafi to scale investments, the company can boost its opportunities and increase steady revenue from advisory and asset management roles.

DevvStream has also been active in other strategic moves. In late 2025, it teamed up with Southern Energy Renewables and agreed to merge into a Nasdaq-listed company. This new company will focus on producing low-cost, carbon-negative fuels like sustainable aviation fuel (SAF) and green methanol.

The plan features a $402 million bond allocation for a biomass-to-fuel facility in Louisiana. This move will boost the company’s role in carbon-negative industries.

Market Forces Powering Climate Capital

Many market trends are shaping the launch of climate investment vehicles that DevvStream and Fayafi are creating. 

Corporate net-zero commitments are a major driver. Many multinational companies now aim to reach net-zero greenhouse gas emissions by 2050 or sooner. To meet these goals, they mix direct emissions cuts with clean energy buying. They also purchase environmental assets like carbon credits. This corporate demand boosts liquidity. It also supports investment platforms that create and manage climate-aligned assets.

Policy changes and ESG reporting standards are also pushing growth. Governments and regulators in developed and emerging markets are improving climate reporting rules. This trend increases the demand for verified environmental assets that help firms demonstrate progress toward emissions targets.

Another key trend is the rise of carbon markets themselves. Both compliance markets (such as the EU Emissions Trading System) and voluntary markets are expanding. Voluntary markets have challenges with pricing and standardization.

Still, they are vital for companies looking to offset and eliminate residual emissions. Research shows that the ecosystem for environmental asset investment is growing. This growth opens doors for financial products that blend climate impact with returns.

Climate Finance Market: Size, Trends, and Outlook

Global climate finance continues to expand, but it still falls short of what is needed. In 2024, global climate finance flows reached over $1.8 trillion in 2023 and will surpass $2 trillion in 2024, based on Climate Policy Initiative (CPI) data. Most of this funding goes to clean energy, transport, energy efficiency, and climate-resilient infrastructure. Private investors now provide more than half of total climate finance.

Despite this progress, the funding gap remains large. Analysts estimate that annual climate investment must rise to $5 trillion to $7 trillion by 2030 to meet global climate goals. This means current funding would need to increase several times within the next few years.

Carbon markets form a smaller but growing part of climate finance. Most future growth is expected in emerging markets, where mitigation costs are lower but access to capital is limited. This has increased interest in structured climate investment vehicles.

In this context, initiatives like DevvStream’s joint platform targeting $100 million by 2027 reflect a broader push to channel private capital into scalable carbon mitigation projects and close global climate finance gaps.

What This Deal Means for Climate Finance

The Fayafi x DevvStream Investment Platform will target:

• Environmental infrastructure
• Carbon solutions
• Technologies that support climate goals

This initiative fits with the growing trend in sustainable investing. Corporations, governments, and financial firms are putting more money into environmental assets. They aim to meet net-zero goals. Though achieving a $100 million target is still a forecast, this partnership is a big step in climate finance growth.

• READ MORE: DevvStream Bets $10M on Bitcoin and Solana to Reinvent Carbon Credit Markets

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