Trend analysis: Carbon markets & offsets integrity — where the value pools are (and who captures them)

The voluntary carbon market contracted by 21% in transaction value during 2024, dropping to $1.4 billion, yet high-integrity credits commanded premium prices 340% above market average (Ecosystem Marketplace, 2025). This bifurcation reveals where value is migrating: away from commoditized, questionable offsets toward verified, additional, and permanent carbon removals that meet increasingly stringent buyer requirements.

Why It Matters

Carbon markets sit at an inflection point. The EU Carbon Border Adjustment Mechanism (CBAM) entered its transitional phase in 2024, and full implementation in 2026 will create demand for carbon accounting precision unprecedented in corporate history. Simultaneously, Article 6 of the Paris Agreement became operational following COP29 in 2024, establishing rules for international carbon credit transfers that will reshape how offsets flow across borders.

For European sustainability leads, the stakes are existential. The EU Emissions Trading System (EU ETS) price fluctuated between €65-95 per tonne in 2024-2025, with forward curves suggesting €100+ by 2027 (ICAP, 2025). Organizations holding low-integrity voluntary market credits face stranded asset risk—these credits may become worthless for compliance purposes and reputational liabilities for sustainability claims.

Value capture in this market has consolidated among: (1) project developers with third-party verified removal technologies, (2) verification and registry bodies extracting certification fees, (3) exchanges and trading platforms taking transaction margins, and (4) advisory firms providing due diligence and portfolio construction services. The Integrity Council for the Voluntary Carbon Market (ICVCM) estimates that <10% of current project pipeline meets Core Carbon Principles (CCP) thresholds, suggesting massive supply-demand imbalances ahead.

Key Concepts

Additionality and Baseline Setting

Additionality—the requirement that emission reductions would not have occurred without carbon finance—remains the most contested integrity criterion. The ICVCM's 2024 assessment methodology requires dynamic baselines updated every five years, project-specific barrier analysis, and conservative crediting approaches. Stanford's Carbon Market Project found that 78% of older REDD+ forest credits failed updated additionality tests when reassessed in 2024.

Permanence and Reversal Risk

Physical carbon storage faces reversal risks from fire, pest, disease, or land-use change. The Oxford Offsetting Principles recommend 100-year permanence thresholds, but most forestry credits use 20-40 year accounting periods. Buffer pools—where 10-25% of credits are set aside against reversal—have proven insufficient in high-wildfire years; 2024 saw 8.2 million tonnes of buffer depletion across major registries (Verra, 2024).

Corresponding Adjustments

Under Article 6.2, countries selling carbon credits internationally must make "corresponding adjustments" to avoid double-counting. This means the selling country cannot claim the emission reduction toward its own Nationally Determined Contribution (NDC). As of early 2025, only 23 countries have established regulatory frameworks for corresponding adjustments, creating legal uncertainty for corporate buyers seeking compliant credits.

MRV and Digital Verification

Measurement, Reporting, and Verification (MRV) technologies have evolved rapidly. Satellite-based monitoring from companies like Pachama and Sylvera now provides continuous forest carbon tracking, while blockchain registries enable transparent chain-of-custody. The Science Based Targets initiative (SBTi) 2024 guidance requires digital MRV for nature-based credits used in beyond-value-chain mitigation claims.

Sector-Specific KPIs

Metric	Low-Integrity Credits	High-Integrity Credits	Premium
Average price per tonne CO2e	$3-8	$25-120	300-1500%
Verification cost per project	$15,000-30,000	$75,000-250,000	3-8x
Third-party audit frequency	Every 5-7 years	Annual	-
Satellite monitoring coverage	0-30%	95-100%	-
Buffer pool allocation	10-15%	20-40%	-
Buyer due diligence time	2-5 hours	40-120 hours	-

What's Working

Microsoft's Carbon Removal Portfolio Approach

Microsoft's carbon removal strategy demonstrates best practice in value capture. In 2024, Microsoft contracted 8.4 million tonnes of carbon removal from 21 projects spanning direct air capture (Climeworks), enhanced weathering (Lithos Carbon), biochar (Charm Industrial), and geological storage (CarbonCure). Crucially, Microsoft pays $200-600+ per tonne for verified removals—far above avoidance credit prices—securing early supply while building market credibility. Their 2024 Environmental Sustainability Report documents rigorous due diligence requiring third-party verification, 1000-year permanence for geological storage, and real-time MRV (Microsoft, 2024).

ICVCM Core Carbon Principles Adoption

The ICVCM's Core Carbon Principles (CCP) framework, finalized in 2024, has emerged as the de facto integrity standard. Major buyers including Swiss Re, Nestlé, and Shell committed to purchasing only CCP-labeled credits by 2026. The CCP assessment requires projects demonstrate additionality, permanence, robust quantification, and no net harm to communities or ecosystems. By Q1 2025, Verra had submitted 340+ project types for CCP assessment, with initial approvals covering 12% of registered projects.

Jurisdictional REDD+ Programs

Country-level (jurisdictional) REDD+ programs have shown higher integrity than project-based approaches. Guyana's ART-TREES-verified program sold 33.5 million credits to Hess Corporation in 2024 at $15/tonne—above typical project REDD+ prices—with corresponding adjustments ensuring no double-counting with Guyana's NDC. This model, where national governments take responsibility for monitoring and permanence, addresses many integrity concerns of fragmented project registries.

What's Not Working

Zombie Credits and Registry Fragmentation

Legacy credits from projects registered before 2020 continue trading despite failing contemporary integrity standards. Analysis by Carbon Market Watch found that 67% of credits retired in 2024 came from projects with methodologies developed before 2015, many lacking satellite monitoring or conservative baselines. Registry fragmentation—with Verra, Gold Standard, ACR, and newer entrants operating independently—creates arbitrage opportunities but undermines market-wide integrity.

Avoidance vs. Removal Confusion

Corporate net-zero claims using avoidance credits (preventing emissions that might have occurred) rather than removal credits (extracting CO2 from atmosphere) face mounting criticism. The SBTi's 2024 guidance explicitly distinguishes between these categories, requiring companies to prioritize value chain reductions before using removals for residual emissions. Organizations claiming "carbon neutrality" via cheap avoidance credits face regulatory scrutiny under EU Green Claims Directive, effective 2026.

Price Discovery Failures

Unlike commodity markets, voluntary carbon credits lack standardized pricing mechanisms. The same project's credits can trade at 2-3x price differences across platforms. CBL's standardized contracts for nature-based credits attempted price discovery, but liquidity remains thin (<$50M daily volume). This opacity benefits intermediaries extracting information asymmetries but undermines buyer confidence and capital allocation efficiency.

Key Players

Established Leaders

Verra – Largest registry with 75%+ voluntary market share, administering Verified Carbon Standard (VCS). Undergoing methodology reforms to meet CCP requirements, with 1.2+ billion credits issued to date.
Gold Standard – Founded by WWF, focuses on co-benefits and SDG alignment. Premium positioning with average prices 40% above VCS equivalents.
South Pole – Swiss project developer and advisory, originating 700+ projects across 50 countries. Faced integrity questions in 2023 but implemented enhanced due diligence in 2024.
Climate Impact X (CIX) – Singapore Exchange-backed platform targeting high-integrity credits for Asian buyers, transacting $150M+ in 2024.

Emerging Startups

Sylvera – London-based ratings agency providing independent credit quality assessments using satellite data. Raised $57M Series B in 2024, rating 5,000+ projects.
Isometric – Carbon removal verification specialist using scientific registry model, backed by Stripe Climate. Focuses exclusively on permanent removals.
Pachama – AI-powered forest carbon monitoring, verifying 25M+ hectares. Technology adopted by major registries for enhanced MRV.
BeZero Carbon – UK ratings startup with AAA-D scale for credit quality, influencing $500M+ in corporate procurement decisions.

Key Investors & Funders

Stripe Climate – Advance market commitment deploying $50M+ annually to carbon removal purchases, pioneering frontier removal procurement.
Frontier (Alphabet, Shopify, Meta, McKinsey) – $925M committed to permanent carbon removal purchases through 2030.
Lowercarbon Capital – Chris Sacca-led fund with $800M AUM targeting carbon removal technologies and infrastructure.
European Investment Bank – €25B climate lending includes carbon market infrastructure and nature-based solutions.

Real-World Examples

Swiss Re's Insurance-Linked Credits: Swiss Re developed a carbon insurance product in 2024 covering reversal risks for nature-based credits. For a 3-5% premium, buyers receive payout if credited carbon is released (fire, disease, land-use change). This innovation addresses permanence concerns and enabled Swiss Re to expand its carbon credit exposure to 5M tonnes annually while maintaining underwriting discipline.
Occidental Petroleum's Direct Air Capture Offtakes: Occidental's Stratos facility in Texas, operational in 2025, contracted 500,000 tonnes/year of DAC credits to multiple buyers including Airbus, TD Bank, and Houston Astros at $400-600/tonne. These geological storage removals with 1000+ year permanence set new price floors for high-integrity removal credits.
JBS's REDD+ Integration Failure: JBS, the world's largest meat processor, suspended use of REDD+ credits in 2024 after investigative journalism linked credited forest areas to ongoing deforestation from cattle ranching. This case illustrates due diligence failures—JBS relied on registry certification without conducting independent verification, leading to reputational damage and €50M+ in sustainability marketing revisions.

Action Checklist

Conduct portfolio audit of existing offset holdings against ICVCM Core Carbon Principles criteria
Establish internal carbon pricing at €80-100/tonne to align voluntary purchases with compliance market realities
Require corresponding adjustment documentation for any credits intended for international climate claims
Allocate 70%+ of carbon spend to removal credits rather than avoidance credits for post-2025 retirements
Subscribe to independent rating services (Sylvera, BeZero) for procurement due diligence
Build direct relationships with 3-5 high-integrity project developers to secure future supply

FAQ

Q: Should organizations continue purchasing voluntary carbon credits given integrity concerns? A: Yes, but with fundamentally different procurement practices. The SBTi's Beyond Value Chain Mitigation guidance supports credit purchases for residual emissions after value chain reductions. However, buyers should shift spending toward high-integrity removals (DAC, biochar, enhanced weathering) and demand CCP-labeled credits. The reputational risk of low-quality credits now exceeds the cost savings.

Q: How will CBAM affect voluntary carbon market dynamics? A: CBAM does not directly accept voluntary market credits for compliance. However, CBAM's implicit carbon price (€65-95+/tonne) establishes a floor for what carbon-intensive imports must pay. This creates demand for embedded carbon accounting infrastructure where voluntary credits play a supporting role. EU importers will need granular supply chain emissions data, driving investment in MRV systems applicable to both compliance and voluntary markets.

Q: What price should we expect for high-integrity carbon credits in 2026-2027? A: Forward contract data suggests $30-50/tonne for CCP-labeled nature-based removals and $300-700/tonne for engineered removals (DAC, BECCS). Avoidance credits may collapse below $5/tonne as buyer demand shifts. Organizations should budget for 3-5x price increases from 2024 levels for credits suitable for external sustainability claims.

Q: How do we verify additionality claims for specific projects? A: Beyond registry documentation, buyers should request: (1) project financing documentation showing carbon revenue materiality (>15% of project NPV typically indicates strong additionality), (2) barrier analysis detailing why project would not proceed absent carbon finance, (3) comparisons to reference projects in the region without carbon finance, and (4) third-party ratings from Sylvera, BeZero, or Calyx Global.

Q: What's the difference between Article 6.2 and Article 6.4 credits? A: Article 6.2 covers bilateral/multilateral agreements between countries trading Internationally Transferred Mitigation Outcomes (ITMOs), requiring corresponding adjustments. Article 6.4 establishes a new UN-supervised crediting mechanism replacing the Clean Development Mechanism (CDM). Article 6.4 credits will carry automatic corresponding adjustments when used internationally. For corporate buyers, Article 6.4 credits (once operational) offer clearer regulatory standing than current voluntary market credits.

Sources

Ecosystem Marketplace. (2025). State of the Voluntary Carbon Markets 2025. Forest Trends.
International Carbon Action Partnership. (2025). Emissions Trading Worldwide: Status Report 2025. ICAP Secretariat.
Integrity Council for the Voluntary Carbon Market. (2024). Core Carbon Principles Assessment Framework. ICVCM.
Stanford Carbon Market Project. (2024). Additionality Reassessment of REDD+ Credits. Stanford University.
Verra. (2024). Annual Report: Verified Carbon Standard Program. Verra.
Microsoft. (2024). Environmental Sustainability Report 2024. Microsoft Corporation.
Carbon Market Watch. (2024). Above and Beyond Carbon Offsetting. Carbon Market Watch.
Science Based Targets initiative. (2024). Beyond Value Chain Mitigation Guidance. SBTi.