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.

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

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.

JPMorgan Chase has signed two major carbon removal agreements this month. The first one involves a purchase of 60,000 metric tons of durable carbon dioxide removal (CDR) over ten years from climate startup Graphyte. The deal uses biomass-based technology that converts agricultural and timber waste into stable carbon blocks stored underground.

In parallel, JPMorgan has also secured 85,000 tons of forest-based carbon removal credits through improved forest management projects. These credits, marketed by Anew Climate, come from U.S. forest projects managed by Aurora Sustainable Lands.

They aim to extend harvest cycles, boost forest health, and enhance long-term carbon storage. The approach helps maintain higher carbon stocks in working forests while supporting biodiversity and sustainable timber production.

Taylor Wright, Head of Operational Sustainability at JPMorgan Chase, noted:

“We were excited to add credits from the Little Bear Forestry Project to our carbon removal portfolio. The dynamic baselining provides meaningful evidence that these credits meet a high threshold for quality, supporting our interests as both a buyer and as a steward of market integrity.”

Carbon Removal Still Small, But Growing Fast

The agreements are part of a broader push by the bank to expand its carbon removal portfolio. While the total volume is small compared to global emissions, the deals highlight a shift in corporate climate strategies.

Companies are now focusing more on durable carbon removal, not just emission reductions. JPMorgan’s mix of engineered and nature-based solutions also reflects a growing trend toward portfolio diversification in carbon removal sourcing.

Carbon removal remains a small but critical part of climate action. The United States emits about 5 billion tons of CO₂ per year, showing how limited current removal volumes still are.

However, long-term demand is expected to grow sharply. The Intergovernmental Panel on Climate Change estimates that by 2100, the world might need to remove 100 to 1,000 gigatons of CO₂. By mid-century, annual removal should reach about 10 gigatons per year.

Today’s market is far from that scale. Most carbon removal deals are measured in thousands or hundreds of thousands of tons. But these early contracts are seen as critical. They help build supply, reduce costs, and attract investment into new technologies.

JPMorgan’s latest deals fit this pattern. Together, the 60,000-ton biomass contract and 85,000-ton forest-based agreement provide long-term demand signals across different removal pathways. This helps scale both emerging engineered solutions and more established nature-based approaches.

Turning Waste Into Permanent Carbon Storage

Graphyte’s process, known as “carbon casting,” uses natural carbon capture through plants. Biomass absorbs CO₂ through photosynthesis. The material is then dried, compressed, and sealed to prevent decomposition. This allows the carbon to remain stored for long periods.

The company uses waste materials such as crop residues and timber byproducts. This reduces the need for new land use and lowers overall costs. The process also uses relatively low energy compared to other removal methods.

Projects linked to the JPMorgan deal include facilities in Arkansas and Arizona. These projects also provide added benefits. For example, using forest thinning residues can help reduce wildfire risk and support land restoration.

This reflects a broader trend in carbon markets. Buyers are increasingly looking for projects that deliver both carbon removal and environmental co-benefits. The bank’s forest-based deal reinforces this trend by supporting improved forest management practices that enhance carbon storage while maintaining productive landscapes.

JPMorgan’s $1 Trillion Net Zero Strategy and Climate Finance Push

JPMorgan’s carbon removal investments are part of a wider climate strategy. The bank has committed to facilitating $1 trillion in climate and sustainable development financing by 2030. It has already deployed about $309 billion between 2021 and 2024 toward this goal.

In addition to financing, the bank is building a diversified carbon removal portfolio. Since 2023, it has signed deals to cut hundreds of thousands of tons of CO₂. This includes a plan for up to 800,000 tons of carbon removal through long-term contracts.

The company aims to match its unabated operational emissions with durable carbon removal by 2030.

JPMorgan is also investing in a range of technologies. These include direct air capture, bio-oil sequestration, biomass storage, and forest-based removal. Its latest forest deal shows a continued commitment to high-quality, nature-based removals that meet stricter standards for durability and verification.

• SEE MORE: Banking in Carbon: JPMorgan Chase Invests $90M in Carbon Removal with CO280

This diversified approach helps reduce risk while supporting different pathways to scale. Compared to many financial institutions, JPMorgan remains an early mover. Most large buyers in carbon removal are still technology companies, particularly Microsoft.

Microsoft Pullback Shakes Market Confidence

However, Microsoft, the largest buyer of carbon removal credits, has reportedly paused new purchases.

The tech giant has played a dominant role in the market. It accounts for up to 90% of global carbon removal purchases and has contracted more than 45 million tons of CO₂ removal to date. In 2025 alone, the company signed agreements for 45 million tons, doubling its 2024 volume and far exceeding any other buyer.

However, reports suggest the company may be adjusting the pace of new deals. This shift does not mean the end of carbon removal demand, but it signals a transition.

The market can no longer rely on a single dominant buyer. In this context, JPMorgan’s continued activity—across both engineered and nature-based deals—shows how new buyers are stepping in to support market stability.

Market Trends: From Cheap Offsets to High-Durability Carbon Credits

The carbon market is evolving quickly. Traditional carbon credits often focus on avoiding emissions, such as protecting forests. However, there is growing demand for removal-based credits that physically take CO₂ out of the atmosphere.

Corporate net-zero goals drive this shift. Many companies now face limits on how much they can reduce emissions directly. Carbon removal is becoming necessary to address remaining emissions.

At the same time, supply remains limited. High-quality removal credits are scarce. This keeps carbon prices high, especially for engineered solutions.

Early buyers like JPMorgan are helping shape the market. Long-term contracts provide price signals and encourage project development. They also help define standards for quality and verification.

Another key trend is the focus on durability. Buyers prefer solutions that store carbon for decades or centuries, rather than short-term offsets.

Early-Stage Market, High-Stakes Growth

Despite growing momentum, carbon removal is still in its early stages. Current volumes are small compared to global needs. Policy support is also limited in many regions.

However, corporate demand is rising. Deals like JPMorgan’s show how private sector investment is driving the market forward.

The combination of long-term contracts, new technologies, and climate finance is expected to accelerate growth. Over time, this could help bring down costs and expand supply.

For now, the focus remains on building scale. Each new agreement adds to a growing pipeline of projects. These projects will play a key role in meeting long-term climate targets.

JPMorgan’s latest purchases may be modest in size. But together, they reflect a larger shift. Carbon removal is moving from early experimentation to a more structured and investable market, supported by a broader mix of buyers and solutions.

• READ MORE: JPMorgan, Microsoft Back $210 Million Carbon Loan in Landmark Climate Finance Deal

The post JPMorgan’s Carbon Bet Marks a Turning Point for the Removal Market appeared first on Carbon Credits.

Microsoft has temporarily halted all new carbon removal purchases as it reviews its broader climate strategy. The move affects direct air capture, biochar, and other engineered carbon removal solutions supported by its $1 billion Climate Innovation Fund, launched in 2020. It could delay hundreds of millions of dollars in planned investments across the carbon removal sector.

The pause was first reported by Heatmap News, in which a company spokesperson said that Microsoft is not indefinitely halting all of its purchases. Rather, she stated:

“We continually review and assess our carbon removal portfolio along with market conditions for the optimal balance on our path to carbon negative.”

Microsoft has been one of the largest corporate buyers of high-quality carbon removal credits. Its decision signals a shift in how major companies evaluate carbon offsets and removal technologies.

The review focuses on whether current solutions can deliver reliable, long-term emissions reductions at scale. It also reflects growing scrutiny of corporate net-zero claims from regulators, investors, and climate groups.

Impact on Carbon Removal Market Pricing

Microsoft’s pause is expected to have an immediate impact on the voluntary carbon market (VCM). The company has played a leading role in scaling demand for engineered carbon removal credits.

These credits are more expensive than traditional offsets. Microsoft has typically paid between $100 and $600 per metric ton of CO₂ removed, compared with $5 to $15 per ton for many nature-based or avoidance credits.

Industry estimates suggest that Microsoft’s pause could significantly reduce demand in the engineered carbon removal market. The tech giant has accounted for as much as 80% to 90% of global purchases of carbon removals, as data from CDR.fyi shows below.

Several suppliers are directly exposed. Companies such as Climeworks and Carbon Engineering have signed multi-year agreements with Microsoft worth a combined $200 million to $300 million. These deals helped fund the early deployment of direct air capture facilities.

The broader voluntary carbon market has already seen price pressure. According to the Ecosystem Marketplace, average prices for carbon credits vary widely depending on quality. Premium removal credits trade at a steep premium due to limited supply and higher verification standards.

Microsoft’s exit, even if temporary, may accelerate a correction in these high prices. It may also reduce near-term funding for early-stage carbon removal technologies.

Microsoft’s Net-Zero Targets Face a Reality Check

Microsoft has some of the most ambitious climate goals in the corporate sector. The company aims to become carbon negative by 2030 and remove all the carbon it has emitted since its founding by 2050.

To support this, the tech giant has committed significant capital to carbon removal. By 2025, it had invested more than $750 million in carbon removal projects and contracted roughly 45 million tonnes of removals.

The current review is examining whether these investments can scale fast enough to meet long-term targets. Key concerns include:

• The permanence of carbon storage, especially for geological projects
• The high cost of engineered removal compared to direct emissions cuts
• The limited capacity of current technologies to deliver millions of tons annually

Many removal methods are still in early stages. Direct air capture, for example, currently removes only a small fraction of global emissions. The International Energy Agency estimates that global carbon removal capacity remains well below what is needed to meet net-zero scenarios by mid-century.

Microsoft is also reviewing how carbon removal fits into its broader decarbonization strategy. This includes aligning removal purchases with renewable energy investments and operational emissions reductions

SEE MORE:

• Microsoft Inks Biggest-Ever U.S. Biochar Deal with Liferaft
• Microsoft Buys 60,000 Soil Carbon Credits from Indigo’s Largest Carbon Crop
• Microsoft Strikes 2 Record-Breaking Carbon Credit Deals

Broader Big Tech Climate Strategy Shifts

Microsoft’s move reflects a broader shift across the technology sector. Other major companies, including Amazon, Meta, and Google, have slowed their carbon removal purchases in recent quarters.

Instead, many are focusing more on reducing emissions directly. This includes expanding renewable energy use, improving energy efficiency, and redesigning supply chains.

This trend aligns with updated guidance from the Science Based Targets initiative (SBTi). The SBTi emphasizes that companies should prioritize emissions reductions across Scope 1, 2, and 3 before relying on carbon removal.

Under this framework, carbon removal is treated as a solution for residual emissions that cannot be eliminated. This approach reduces reliance on offsets and increases pressure on companies to decarbonize core operations.

At the same time, regulatory scrutiny is increasing. In the United States, the U.S. Securities and Exchange Commission has proposed new climate disclosure rules. These rules would require companies to provide more detailed reporting on emissions and climate-related risks.

This is pushing companies to strengthen verification standards for carbon credits and avoid reputational risks linked to low-quality offsets.

A Turning Point for Carbon Removal Investment Models

Microsoft’s decision may signal a broader shift in how companies support carbon removal technologies. Instead of buying credits directly, some firms are exploring new funding models.

These include advance market commitments, where companies guarantee future demand, and direct investments in technology development. These approaches can provide more stable funding while reducing reliance on spot market purchases.

The technology sector has been a major driver of carbon removal demand. Since 2022, it has accounted for about 40% of high-quality removal credit purchases. Between 2020 and 2025, major tech companies committed billions of dollars to carbon removal initiatives.

If large buyers step back, developers may face funding gaps in the short term. However, this could also push the industry to improve cost efficiency and scalability.

Current removal costs remain high. Direct air capture can exceed $500 per ton, though companies aim to reduce this below $100 per ton over time. Achieving this will require technological advances, economies of scale, and supportive policy frameworks.

What It Means for Carbon Markets and Climate Goals

Microsoft’s pause marks a key moment for the VCM. It highlights the growing demand for higher standards, better verification, and clearer climate impact.

In the short term, the decision may slow growth in the premium carbon removal segment. Prices could soften, and some projects may face delays or funding challenges.

However, the long-term impact could be positive. Stronger scrutiny may lead to more reliable and transparent carbon removal solutions. This would help build trust in the market and attract new investment.

For companies, the message is clear. Net-zero strategies must focus first on reducing emissions. Carbon removal remains important, but it must be credible, scalable, and cost-effective.

For the carbon removal sector, the challenge is to prove that its technologies can deliver on these expectations. If successful, it will play a critical role in global climate efforts.

The International Energy Agency and other bodies have made it clear that carbon removal will be essential to achieving net-zero emissions by 2050. The question is not whether it is needed, but how fast it can scale.

As the sector evolves, companies that can deliver verified, permanent, and affordable carbon removal solutions are likely to lead the next phase of expansion.

• READ MORE: Microsoft Signs 626,000-Tonne Carbon Removal Deal with Svante and Indigenous-Led North Star Project in Canada

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