Transformation of the Carbon Credit Market: Key Trends for 2025 | AIM Carbon
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Transformation of the Carbon Credit Market: Key Trends for 2025

Transformation of the Carbon Credit Market: Key Trends for 2025

The carbon credit market is undergoing a period of profound change. Following the rapid surge in 2020–2021 and heightened volatility in 2022–2023, a new phase is beginning—one focused on quality, transparency, and alignment with global climate goals. According to international research findings and expert opinions in the field, current trends in the carbon unit market include the following:

Trend #1: Focus on Project Quality

In recent years, the carbon market has undergone significant transformation. The sharp increase in trading volume and price fluctuations has given way to a more deliberate approach where the integrity and quality of credits have taken center stage. This evolution reflects a growing understanding that high-quality climate projects are essential for maintaining market trust and reliably meeting both global and corporate climate commitments.

For instance, the corporate climate action standard Science Based Targets Initiative (SBTi) has, for the first time, officially considered the use of carbon credits as a way for companies to meet their science-based emission reduction targets.

Morgan Stanley Capital International (MSCI) study 2025 Sustainability and Climate Trends to Watch, which analyzed data from over 4,000 climate projects, found that as of July 2024, 47% of “retired” credits were from projects rated B or lower, while only 8% were from projects rated A or AA. No project received the highest AAA rating. However, there is positive momentum: the share of credits with the lowest CCC rating among retired units decreased from 29% to 15% (Q2 2022 – Q2 2024), and the share of A or AA-rated credits doubled from 6% to 12%.

Trend #2: Integration with Compliance Markets and New Carbon Credit Mechanisms

A significant trend is the growing demand for high-quality carbon credits within compliance markets. There is a clear increase in interest in reliable carbon units in regulated systems. National and regional compliance schemes in several countries allow the use of carbon credits to offset greenhouse gas (GHG) emissions under carbon taxation or emissions trading systems (e.g., Australia, China, Singapore, South Africa), though often with quantitative and qualitative restrictions.

A particularly important initiative is the CORSIA program (Carbon Offsetting and Reduction Scheme for International Aviation), launched by ICAO under the UN to offset GHG emissions from the aviation sector. The first phase (2024–2026) includes 126 participating countries. According to MSCI, up to 140 million tons of carbon credits may be needed to meet CORSIA targets.

Significant progress was also made at COP29 in establishing the Paris Agreement Crediting Mechanism (PACM), which will allow countries and companies to officially acquire credits under Article 6.4 of the Paris Agreement.

Trend #3: Growth of the Carbon Dioxide Removal (CDR) Project Segment

There is a growing preference for carbon credits associated with carbon dioxide removal (CDR), such as biochar soil enhancement, Direct Air Capture (DAC), afforestation, and other techniques.

These projects physically remove CO₂ from the atmosphere and store it in ecosystems or underground reservoirs for extended periods. Corporations are increasingly prioritizing these credits in their “Net Zero” strategies. Although typically more expensive than avoidance credits, the higher price of CDR credits reflects their long-term carbon storage and verifiable additionality. The share of carbon removal credits retired annually from registries increased from less than 20% to 30% in 2024.

At the same time, avoidance-based carbon credits generated under strict methodologies remain scientifically and practically justified as part of a robust climate strategy. Their immediate effect on reducing GHG emissions, scalability, and co-benefits for local communities make them indispensable for achieving climate goals this decade. The most effective climate strategies will combine high-quality avoidance and removal credits in line with emerging best practices.

Strategic Recommendations for Market Participants

Given the trends discussed, companies and investors looking to purchase carbon credits are advised to consider the following strategies:

  • Diversify portfolios by project type, standard, and geographic region to minimize risk and support decarbonization goals.

  • Secure long-term carbon credit supply through partnerships with reputable developers and innovative agreement structures such as offtake and forward contracts.

  • Increase corporate transparency and ESG reporting to meet regulatory requirements and reduce the risk of greenwashing accusations, including clear disclosure of carbon credits’ role in corporate decarbonization strategies.

“2025 could become a turning point for the global carbon credit market. Rising demand, improved credit quality, and integration with compliance mechanisms are laying the groundwork for sector-wide expansion and its key role in global decarbonization. The shift toward transparent, scientifically grounded, and high-quality carbon credits will be a defining factor in the effectiveness of carbon markets in combating climate change over the next five years,” emphasizes Linara Khadimullina, Climate Projects Development Department Specialist at AIM Carbon.