Deep dive: carbon markets & offsets integrity – fastest‑moving subsegments to watch

Why it matters

Carbon markets channel private finance into emission reductions and removals outside corporate value chains. When credits are credible, they support projects that protect forests, restore peatlands, deploy clean cookstoves and develop engineered carbon removal technologies. For the UK – which already hosts a growing net‑zero economy employing nearly three percent of the workforce and growing three times faster than the wider economy – a well‑functioning carbon market offers both climate and economic benefits. However, trust has been eroded by oversupply of low‑integrity credits, opaque methodologies and long verification times. Understanding which segments are gaining traction and how to evaluate them helps buyers navigate this complex landscape.

Key concepts & market fundamentals

Avoidance vs. removals. Most credits either avoid emissions (for example by preventing deforestation or improving cookstoves) or remove carbon from the atmosphere (through afforestation, soil sequestration or engineered pathways such as biochar, direct air capture and BECCS). Quality frameworks now distinguish these categories and require that avoidance credits are used alongside deep internal decarbonisation while durable removals compensate for residual emissions.

Quality premiums. The market has bifurcated between high‑quality and lower‑quality credits. Sylvera data show that afforestation, reforestation and revegetation (ARR) projects rated BBB+ command median prices above $35 per tonne, whereas lower‑rated equivalents trade below $20. In REDD+ markets the same pattern holds: buyers pay a clear premium for projects with robust baselines, permanence mechanisms and strong community safeguards. This “flight to quality” is structural and underscores the importance of ratings and independent verification.

Fragmented pricing. There is no single “carbon price”. Each project type has its own spot price range, and forward offtake prices diverge even further. Weighted average spot prices hover around $5.6 per credit, but durable carbon removals are contracted at around $180 per credit. Price fragmentation means buyers must build scenario‑based budgets and assess quality, policy eligibility and delivery risk for each segment rather than relying on a single index.

Compliance and voluntary convergence. Article 6 of the Paris Agreement and schemes like CORSIA are blurring the line between voluntary and compliance markets. Airlines now need CORSIA‑eligible credits for emissions above 85 percent of 2019 levels, and the EU and UK are developing pathways to integrate durable removals into emissions trading systems. Buyers should therefore consider whether projects can qualify as internationally transferrable mitigation outcomes and meet host‑country requirements.

Fast‑moving subsegments

1. High‑quality nature‑based solutions. Demand is shifting toward afforestation/reforestation and improved forest management projects with independent ratings, and away from low‑integrity avoidance credits. ARR and IFM projects have seen increased interest as buyers seek locally issued credits with transparent baselines, strong leakage controls and community co‑benefits. Supply constraints remain, however, because higher standards reduce the pool of eligible projects. In the UK, only eight companies have achieved the top A+ rating in Allied Offsets’ buyer league, highlighting the scarcity of high‑integrity purchasers.

2. Engineered removals on the rise. Technical carbon removal registrations grew rapidly in 2025. On‑registry issuance volumes rose 85 % compared with 2024, with an average annual growth rate of 119 % since 2019. The number of carbon‑dioxide‑removal (CDR) projects listed on registries increased by 73 %, and technical offtake deal volumes jumped 305 % between 2024 and 2025. Most of this growth comes from biochar, utilisation and BECCS pathways, but novel technologies like direct air capture (DAC) and enhanced rock weathering are also accelerating. Despite the surge, the market is nascent: issuances still outpace retirements and demand is concentrated among 100–200 early adopters.

3. Durable removal shortage and value pool. McKinsey projects a global shortfall of up to 50 MtCO₂ of durable removals by 2030. This scarcity underpins a value pool that could reach US$1.2 trillion by 2050 under an optimal net‑zero scenario. The UK is well‑positioned to capture a share of this market thanks to its geological storage potential and expertise in carbon capture and storage, but projects need long‑term offtake agreements and blended finance to become bankable.

4. Digital MRV and data infrastructure. Manual monitoring and verification can delay credit issuance by two to three years and leave up to 4.8 gigatons of credits stranded. Digital MRV platforms that use satellites, drones, sensors and blockchain offer near‑real time data, automated calculations and transparent audit trails. SustainCERT notes that digital innovations drastically improve the reliability and efficiency of MRV. Indonesia’s pilot with the Gold Standard uses digital MRV to cover 800,000 tCO₂e of reductions, while Verra and Pachama’s remote‑sensing project aims to scale access to high‑integrity forest credits. India’s Anaxee programme combines a 40 000‑strong field force with AI to reduce verification costs by 70 % and cut verification times from 14 months to six months.

5. Long‑term offtakes and buyers’ coalitions. Durable offtake commitments underpin emerging segments. Offtake agreements announced in 2025 totalled US$13.7 billion, but will only deliver around 78 million credits over the next decade at an average price of $180 per credit. Concentrated among a handful of buyers (with Microsoft accounting for 58 % of volumes), these deals highlight both enthusiasm and the need to broaden participation. Programmes like Brazil’s ProFloresta+, which will purchase 5 million high‑integrity credits over 25 years, provide predictable demand and de‑risk projects. The UK’s emerging buyers’ coalitions could emulate this model, locking in supply and supporting domestic projects.

What’s working and what isn’t

Progress. Quality premiums are entrenched; ratings and integrity frameworks guide procurement decisions. Technical removal markets are scaling with rapidly increasing issuances and offtakes. Digital MRV pilots from Indonesia, Verra and Anaxee demonstrate that automated data collection can reduce costs and accelerate issuance. In the UK, corporates buying credits are decarbonising twice as fast as those that do not, and eight UK firms have achieved top quality ratings.

Challenges. Oversupply of legacy credits depresses prices and undermines trust; retirements remain far below issuances. Durable removals are scarce and expensive, with projected shortages . High transaction costs and fragmented standards make due diligence onerous. Many UK buyers are hesitant to purchase credits because of uncertainty around climate claims and the lack of clear guidance . Building domestic supply requires policy clarity, infrastructure investment and community engagement.

A quick framework for evaluating credits and sectors

1. Quality rating and certification. Start by checking whether the project adheres to recognised integrity frameworks (ICVCM Core Carbon Principles, VCMI Claims Code, Oxford Principles). Look for independent ratings (A+, BBB, etc.) and strong additionality, permanence and leakage controls.
2. Price and volume benchmarks. Compare spot and forward prices across segments (ARR, REDD+, technical removals) and check whether premiums align with quality ratings. Use registries and market intelligence platforms to track price spreads.
3. MRV readiness. Assess whether the project uses digital MRV tools. Verify issuance timelines and look for evidence that digital data reduces costs and verification times.
4. Policy eligibility. Evaluate whether credits could qualify under compliance schemes (CORSIA, Article 6, UK ETS) and whether host‑country approvals are in place.
5. Co‑benefits and community engagement. Ensure projects deliver biodiversity, social and economic benefits. Confirm that Indigenous and local communities have free, prior and informed consent and participate in revenue sharing.
6. Supply–demand dynamics. Examine issuance vs. retirement trends, offtake commitments, and pipeline capacity. For durable removals, pay attention to projected shortages and value pools.

Fast‑moving segments to watch

• High‑rated ARR and IFM projects – Quality premiums are widening, and demand is growing for projects with strong baselines, rigorous MRV and community safeguards.
• Biochar and BECCS – Technical removal issuance volumes increased by 85 % year‑on‑year, driven largely by biomass‑based CDR and utilisation projects, with offtake volumes surging 305 %.
• Direct air capture and mineralisation – Still small but growing; capital costs remain high but early adopters are locking in $180+ per tonne contracts.
• Digital MRV platforms – From satellites to AI‑enabled field audits, dMRV reduces verification costs and accelerates issuance.
• Buyers’ coalitions and long‑term offtakes – Multi‑year purchase agreements and pooled procurement help de‑risk projects and scale supply.

Action checklist for UK stakeholders

• Prioritise high‑integrity credits. Use independent ratings and certifications to filter projects; avoid low‑quality credits even if they are cheap.
• Integrate carbon strategy with net‑zero plans. Credits should complement, not replace, deep decarbonisation. Align purchases with Science Based Targets and disclose how credits fit within climate claims.
• Leverage digital MRV. Favour projects that adopt digital monitoring tools to reduce costs and improve transparency.
• Consider long‑term offtakes. Enter multi‑year contracts or join buying coalitions to secure supply and stabilise prices.
• Monitor policy developments. Track Article 6 negotiations, CORSIA eligibility and UK/EU regulatory guidance to ensure credits remain compliant.
• Support domestic supply. Invest in UK projects that leverage geological storage and natural capital advantages; engage local communities and develop skills to build a just transition.

FAQ

What are the most promising sectors for carbon credits? High‑rated afforestation/reforestation and improved forest management projects remain popular because they provide measurable nature and community benefits and command price premiums. Engineered removals such as biochar, BECCS and direct air capture are growing quickly with issuance volumes up 85 % year‑on‑year, but supply is still limited and costs are high.

Why is digital MRV important? Traditional MRV can delay credit issuance for years and cost millions. Digital tools automate measurements using satellites, drones, sensors and AI, reducing verification costs by up to 70 % and cutting timelines from months to weeks. They also provide transparent data that increases buyer confidence.

How can I ensure credits are truly additional and permanent? Look for projects that would not occur without carbon finance, use robust baselines, include buffer pools or insurance, and commit to long‑term monitoring. High ratings and adherence to integrity frameworks are good indicators of additionality and permanence.

Sources

• Sylvera. (2026). Market Trends: ARR Credit Ratings, Pricing and Market Convergence. Sylvera.
• AlliedOffsets. (2025). VCM Overview: Technical Removal Issuances and Offtake Growth. AlliedOffsets.
• AlliedOffsets. (2025). Buyer Preferences: Shift Toward High-Rated ARR and IFM Projects. AlliedOffsets.
• UK Carbon Markets Forum. (2025). Net-Zero Economy Analysis and Durable Removal Shortage Projections. UK Carbon Markets Forum.
• KPMG. (2024). Manual Verification Delays and Developer Costs in Carbon Markets. KPMG.
• SustainCERT. (2024). Digital MRV: Reliability, Efficiency and Near-Real-Time Issuance. SustainCERT.
• Gold Standard & Indonesia. (2024). Digital MRV Pilot Programme: 800,000 tCO2e Coverage. Gold Standard.
• Verra & Pachama. (2025). Remote-Sensing MRV Pilot: Automated Measurement and Cost Reduction. Verra.
• Anaxee. (2025). Digital Runners: AI-Enabled Field Data Collection and Verification. Anaxee.
• UNEP. (2025). Investor Premiums for High-Integrity Nature-Based Credits. United Nations Environment Programme.