The global carbon credit market is increasingly rewarding quality over volume, according to the State of Carbon Credits 2025 report released by Sylvera. While overall carbon credit retirements declined last year, higher prices for credits with stronger environmental integrity pushed total market value upward.

In 2025, carbon credit retirements fell by 4.5% to around 168 million credits. Despite this drop in volume, total end-user spending increased by 6% to approximately $1.04 billion. The shift was driven by buyers paying a premium for higher-quality credits, lifting the weighted average price to $6.10 per tonne, compared with $5.75 in the previous year.

Forward Markets Signal a Structural Shift

The report points to the rapid expansion of the forward offtake market as a key indicator of how carbon pricing is evolving. Offtake agreements announced in 2025 reached $12.3 billion, a sharp increase from $3.95 billion in 2024. These long-term contracts, extending through 2035, are expected to deliver around 12 million credits annually at an average price of $180 per tonne.

Although these forward deals account for less than 10% of current retirement volumes, they imply more than $2 billion in annual market value. This highlights the growing willingness of buyers to lock in future supply of high-integrity credits at significantly higher prices than those seen in today’s spot market.

“Spot market volumes only tell part of the story,” said Allister Furey, CEO of Sylvera. He noted that forward markets show buyers are already valuing future supply very differently, paying close to $180 per tonne for high-quality removals compared with a spot market average of around $6.

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Demand Concentrates on Higher-Rated Credits

Buyer scrutiny is increasingly shaping demand. Credits rated BBB or above accounted for 31% of retirements in 2025, up from 25% the year before. For the first time, credits rated BB or higher represented half of all retirements, signalling a clear move toward stronger quality thresholds.

At the same time, supply constraints remain acute at the top end of the market. Highly rated credits have been in deficit for the third consecutive year, while lower-quality and unrated credits continue to face oversupply.

Widening Price Gaps Across Project Types

Price differentiation has become more pronounced across project categories. In the afforestation, reforestation and revegetation (ARR) segment, credits traded in a wide range from about $2 to over $50 per tonne. By the end of 2025, highly rated ARR projects averaged more than $26 per tonne, compared with roughly $14 for lower-rated equivalents.

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Compliance Demand Adds Pressure

Compliance-linked demand is also reshaping market dynamics. Nearly a quarter of all credits retired in 2025 were associated with compliance schemes, including CORSIA and CCP-labelled credits. Sylvera expects compliance demand to overtake voluntary market purchases by 2027, intensifying competition for limited supplies of compliance-ready credits.

As compliance and voluntary buyers increasingly converge on the same pool of high-integrity credits, the report suggests that upward pressure on prices is likely to persist, reinforcing the market’s tilt toward quality rather than scale.

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