Washington, DC, 29 May 2025 – Forest Trends’ Ecosystem Marketplace (EM) published new research today that shows the voluntary carbon market (VCM) in transition to a new phase with a greater focus on quality and integrity, and lower levels of market liquidity as measured in credit volumes traded. Though transaction volumes fell by 25 percent in 2024, credit prices declined by only 5.5 percent and retirements held fairly steady, indicating that underlying demand remains resilient even amid broader market pressures.
These dynamics reflect a deeper transformation. EM analysts say the market is undergoing a significant supply-side reboot in response to increasingly sophisticated demand and market shifts towards quality.
“We’re seeing a winding down of a legacy market from older methodologies, and the scaling up of a new phase of the VCM,” said Charlotte Barber, Forest Trends’ Associate Director of the Ecosystem Marketplace. “While supply from new project types takes time to ramp up to meet the needs and demand of this new phase, end-user demand is staying steady, with credit retirements holding steady and increasing demand for some trusted project types.”
The evolution of the VCM is not without its challenges. Market participants say that policy and integrity frameworks developed in recent years will take time to operationalize. Still, these developments are widely viewed as positive steps toward a more credible and high-quality marketplace.
Other key findings from the report include:
- The volume of credits retired (an indicator of end-user demand) from the ten largest standards has plateaued at an elevated level since 2021, with 182 million tons of credits retired in 2024.
- 2024 posted the lowest transaction volume since 2018, but market value is 1.9x higher than 2018, on the strength of relatively buoyant credit prices.
- On average, credits representing emissions removals were 381 percent more expensive than emissions reduction credits in 2024—up from 245 percent in 2023. (“Removals” credits come from actions that take greenhouse gases out of the atmosphere and store them, such as through reforestation projects or direct air capture (DAC). “Reductions” credits prevent or reduce emissions compared to the status quo, including projects like improving fuel efficiency or protecting forests at risk of destruction.)
- Buyer preference for credits from recent vintages reached unprecedented levels. There was a 217 percent premium for credits with vintage from the last five years, compared to a 53 percent premium in 2023.
- The Integrity Council for the Voluntary Carbon Market’s (ICVCM) Core Carbon Principles (CCPs) are beginning to affect market demand. However, the effect on transaction volume was isolated to project types with existing supply in 2024, and overall market impact was relatively minimal since ICVCM only approved a small number of project types in 2024. In market segments where CCP-approved credits were available to buyers, transaction volumes and prices were markedly higher:
- Waste Disposal transaction volume transactions grew over 3x, driven by demand for CCP-approved Landfill Gas credits.
- The average price of Landfill Gas credits increased by 35 percent from the first half of the year to the second half of the year (following ICVCM approval) with 3.1M credits traded—a 149 percent increase in volume from 2023.
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Ricardo Bayon, Partner and Co-founder of Encourage Capital, says: “Long have reports on the death of carbon markets been exaggerated. This is a market that goes through lots of ups and downs and we have seen our share of cycles. We must be in the 5th or 6th such cycle of rapid growth, decline, rapid growth. This year is a down year. But for those who are paying attention, that decline is only around the “loosely rational exuberance” that surrounds this market.
“The underlying fundamental indicator of demand, the retirements, continue to grow and they have been growing on a pretty constant trend since the market was created. Those companies and individuals who are buying carbon and retiring them are still doing so undeterred; chastened but not deterred. And so the market continues to grow (maybe not as rapidly as its most fervent acolytes would like), and I believe it will once again boom when issues of trust and integrity are dealt with. And they are being dealt with. Buckle up. What goes down, can also go up.”
Eron Bloomgarden, CEO of Emergent, the coordinator of the LEAF Coalition, says: “There is certainly a shortage of the types of higher integrity credits that companies are increasingly demanding, and this is one of the key contributors to lower trading volumes.
“Jurisdictional REDD+ credits are one such example. Many countries have been working for several years to put in place robust jurisdictional programs and are now working to bring these credits to market. We continue to see strong interest in purchasing these credits, once issued, from both LEAF Coalition corporates and other buyers, such airlines looking to purchase credits for CORSIA. We expect to see significant increases in volumes traded as forest countries bring these to market and sign agreements with Emergent and other buyers.
“But high-integrity supply alone will not scale the market to where we need to be to tackle the climate crisis. More work is still needed on the demand side, working with companies to build stronger business cases and standard setters to ensure they send a clearer signal that compensation for emissions via removals and reductions is vital for the millions of tonnes of carbon companies will continue to emit as they progress towards net zero.”
Alexia Kelly, Managing Director, Carbon Policy and Markets Initiative, High Tide Foundation says: “This year’s report demonstrates a market that is transitioning to higher quality, higher prices, and still steady retirements. Committed market participants aren’t backing away, but this market is still in its infancy. Strong demand signals and continued focus on quality and market reform are fundamental to increasing trust, growth and impact.”
María Alejandra Cantuarias, Head of Conservation and Carbon Markets at Bosques Amazónicos says: “The development of a more transparent, robust, and credible carbon market is a shared goal across all stakeholders. Data such as that provided by Ecosystem Marketplace enables a more accurate characterisation of voluntary market dynamics, supports trend analysis, identifies bottlenecks and highlights priority areas for improvement. Such information is critical for addressing structural barriers, enhancing decision-making, and scaling effective climate action in line with global climate commitments.”
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Download the full report, State of the Voluntary Carbon Market 2025: Meeting the Moment – Renewing Trust in Carbon Finance.