Global Carbon Market Strategy 2025
- Najma Hasnah
- Aug 14
- 13 min read
Updated: Aug 15
Introduction
The urgent need to address climate change has driven unprecedented growth and innovation in carbon markets. Companies worldwide are setting net-zero targets and looking to carbon credits to neutralize emissions they cannot eliminate, while regulators increasingly put a price on carbon. This strategy overview explores global and regional carbon markets, focusing on key trends, policy shifts, and strategic approaches.
Carbon Markets Overview
Carbon markets enable the trading of credits representing greenhouse gas emission reductions or removals. There are two types:
Compliance markets (regulated by governments, e.g. EU ETS, China ETS)
Voluntary markets (used by companies/individuals for carbon offsetting)
Voluntary Carbon Market (VCM) in 2025
The VCM has experienced both rapid growth and contraction. After peaking at an estimated $2 billion in annual value around 2021, the VCM underwent a contraction as the industry addressed quality and credibility issues. In 2024, the VCM’s transaction value fell to roughly $535 million (down ~70% from its 2021 high). Despite short-term declines, forecasts predict a market size of \$10–25 billion by 2030, potentially more.
For example, research by Bloomberg and MSCI indicates a mid-case of $10–40 billion in 2030 and perhaps up to $100+ billion by 2050 in higher-demand scenarios. One study notes a range of $10–25 billion by 2030 depending on climate policy ambition. In short, the voluntary market remains a small fraction of what’s needed for global climate goals valued around $2 billion in 2023 but has significant upside as credibility improves and demand from corporate climate commitments accelerates.
Key Characteristics of VCM
Dominated by corporate buyers (e.g. tech, aviation, energy)
Strong demand for nature-based and high-integrity removal credits
Emerging standards (e.g. ICVCM's Core Carbon Principles)
Rising scrutiny and crackdown on low-quality credits
Compliance Carbon Markets in 2025
Compliance carbon markets have expanded steadily worldwide, now forming the backbone of carbon pricing efforts. As of 2025, over 50 jurisdictions (countries, states or regions) have implemented emissions trading systems (ETS) or carbon taxes. These markets are far larger in value than the voluntary market and are driven by law: companies in regulated sectors must obtain allowances or credits to cover their emissions under a cap-and-trade program or pay a carbon tax.
In 2023, the global value of traded carbon allowances reached a record high of ~€881 billion (US$949 billion). Nearly 90% of this value comes from the EU Emissions Trading System (EU ETS) – by far the world’s largest carbon market. The EU ETS, operating since 2005, caps emissions from power plants, factories, and airlines in Europe, and allows trading of emission allowances.
Years of tightening caps have driven the EUA price to around €80–100 per ton in recent years. In early 2023 EU carbon prices hit a record €100/ton before settling in the €60–€80 range by mid-2024 amidst economic headwinds. The EU ETS alone was worth ~€770 billion in 2023, a 2% increase from the previous year, reflecting both high prices and large volumes (12+ billion tons traded). The EU’s long-running market has achieved a 47% emissions cut in covered sectors by 2023, demonstrating the impact carbon pricing can have when strictly applied.
Collectively, compliance markets are gaining traction faster than the voluntary market because they are underpinned by law and government policy. They also tend to have higher and more stable pricing, which drives low-carbon investment. The World Bank’s 2023 State and Trends of Carbon Pricing report noted that roughly 23% of global emissions are now covered by a carbon price (either tax or ETS), a figure that has been rising annually.
Other compliance markets are also growing:
EU ETS: Covers power, industry, aviation; EUA prices \~€60–100/ton
China ETS: Expanding sectors; \~¥80.5/ton in 2023
North America: California, RGGI, Canada ETS
Southeast Asia: Indonesia and Vietnam launching national carbon markets
At COP29 in 2024, countries agreed to build a centralized UN carbon credit trading system under Article 6.4 of the Paris Agreement. This will help move billions in climate finance through regulated, cross-border markets.
Governments now require domestic registration of carbon projects (like Indonesia’s SRN system) and apply royalties or taxes to credits. As Article 6 progresses, some voluntary credits may shift into this regulated space to make sure they don’t count twice to boosting their value and credibility.
For example, Indonesia now requires all carbon projects to register in the national system (SRN) and sell some credits through it. In 2023, the country launched IDXCarbon, its official carbon exchange. By April 2025, the platform had traded 1.6 million tons of CO₂e worth IDR 77.9 billion (USD 4.6 million). Prices ranged from IDR 58,800 ($3.66) for local forestry credits to IDR 144,000 (~$8.78) for tech-based credits.
This shows carbon markets are expanding beyond Europe and North America — with Southeast Asia, Latin America, and Africa joining in.
In summary, compliance carbon markets are growing fast and cutting emissions especially in the EU. In 2023, global carbon allowance trading reached almost $1 trillion. Governments are making markets stronger by:
Tightening emissions caps
Adding more sectors
Linking systems across countries
For businesses, this creates both risk and opportunity. Carbon prices can affect costs, but also offer profit chances many banks now treat carbon like any other tradable commodity.
Global and Regional Market Dynamics
Global Trends
Demand-supply gap: Need for 4.5x more credits by 2030
Article 6: UN’s carbon trading mechanism now enabling bilateral deals (e.g. Switzerland-Peru)
Regional Activity for Carbon Market Strategy
EU: Regulatory innovation and carbon border taxes (CBAM)
Asia: Singapore as a trading hub, Indonesia’s SRN & IDXCarbon exchange
Africa or Latin America: Growing supply base, increasing regional regulation
Local Engagement
Projects involving local communities are gaining trust and impact
Indigenous partnerships and equitable benefit-sharing models are key
Key Market Trends
Shift from Avoidance to Removal
The market is moving toward carbon removal credits rather than avoidance credits. Avoidance projects such as preventing deforestation or landfill emissions are still used but face questions about how permanent and additional they really are. In contrast, removal projects such as reforestation, biochar, or direct air capture that physically take CO₂ out of the atmosphere are not, which is critical for meeting net-zero goals.
High-Integrity Credits with Co-benefits
Buyers now want carbon credits that do more than just reduce emissions. They look for projects that also help biodiversity, local communities, or water systems that deliver tangible co-benefits to communities. This is driving a “premiumization” of credits, for example, projects that are nature-based solutions (NBS) and explicitly advanced SDGs can fetch much higher prices.
Article 6-Readiness and Jurisdictional Approaches
More countries are developing large-scale forest protection (REDD+) programs at the national or state level, especially in tropical regions. These programs could create carbon credits that are approved by governments and sold internationally under Article 6 of the Paris Agreement. Instead of many small projects, the market may shift to fewer but bigger, government-backed ones. Being “Article 6-ready” meaning projects meet national and international standards will be key for long-term success.
Nature & Tech Convergence (Digital MRV and Transparency)
Technology is improving how carbon projects are monitored. Tools like satellites, drones, and AI can now track forest growth and carbon storage in near real-time, reducing the cost and improving accuracy. Although the boom in blockchain tokenization slowed down after concerns from standards bodies like Verra, blockchain is still useful for secure tracking and automating carbon transactions.
Marketplace Evolution and Disintermediation
Carbon trading is becoming more streamlined and transparent. New exchanges like ACX and CIX offer stock-like platforms to trade carbon credits. These platforms help with pricing, trust, and access. Some developers now sell credits directly through websites or apps, cutting out middlemen.
Investor Insights
Carbon Markets as an Investment Class
Carbon markets are quickly rising as an investment class in their own right. The appeal is clear; rising demand, a role in climate solutions, and potentially significant returns as carbon prices increase. In theory, investing in carbon projects could yield returns from both credit sales and asset appreciation. It also offers diversification for investors interested in sustainable assets. However discount factors, and long payback periods are part of the perceived risks as key deterrents, such as:
Long Return Horizon
Outcome Uncertainty
Scale and Liquidity
Given these challenges, how can the market attract and unlock capital at the needed scale? Fortunately, we have examples and analogies to draw on – notably from the renewable energy sector’s growth. In the early days, wind and solar faced similar investor skepticism. Carbon markets can follow a similar direction:
Strategic Partnerships and Offtake Agreements
To reduce risk and attract funding, project developers are forming long-term partnerships with corporations and investors. A popular approach is offtake agreements, where a company agrees to buy a set number of credits each year at a fixed price. This gives the project reliable cashflows and reassures investors. Some firms even pre-pay for rights to future credits, giving developers early cash to start projects. Examples include the LEAF Coalition and corporate-backed credit deals.
Insurance, and Risk-Sharing
New insurance options are helping to build trust. These include protection in case a project underperforms or if issued credits are canceled. Organizations like MIGA (World Bank) could insure political risks, while private insurers now offer coverage for credit delivery failures.
Blended Finance and Public or Private Funding Mix
Blended finance refers to structuring deals with both public and private capital to improve the risk-return profile. In carbon markets, this could mean development finance institutions (DFIs) or green funds provide low-interest loans or grants for early project stages, and private investors come in for later stages or scaling, knowing the project groundwork is supported. A PwC analysis notes that blended finance uniting philanthropy, government, and private investors can bridge funding gaps in high-impact carbon projects. Essentially, leveraging public climate finance to catalyze private investment is key and indeed COP28/29 discussions have emphasized mobilizing such finance flows at scale.
Standardization and Track Record
Over time, as more projects succeed and data accumulates, investors will gain confidence. The creation of standard contract terms and benchmarks will facilitate entry of traders and funds. There are already carbon-focused investment funds emerging. Big banks are already moving into space. Crédit Agricole, for example, announced in 2024 it would scale down precious metals trading in favor of carbon trading, noting the strong outlook for the EU ETS.
Innovative Investment
We might see new financial products such as carbon project portfolios, yieldcos, or securitization of future carbon credit streams. If an aggregator pools dozens of projects, they can diversify risk and potentially issue asset-backed securities where investors get a fixed yield from the stream of credit sales. Another idea is “carbon streaming”, an investor gives upfront capital to a developer in exchange for a portion of credits produced over time.
What Investors Want in Carbon Projects
From an investor’s view, carbon projects offer more than just financial returns. ESG-focused funds value the environmental and social impact, while companies that invest in their own offset projects gain supply security and a strong sustainability story. Some also see carbon credits as a hedge against inflation or a new type of commodity investment, carbon prices can rise when climate rules tighten, making credits more valuable. In fact, EU carbon prices have stayed strong even during tough market periods.
But investors are also cautious. In 2024, two well-known carbon startups, Nori and Running Tide shut down. Nori, which focused on soil carbon using blockchain, faced technical challenges and low demand. Running Tide, which aimed to store carbon by sinking kelp, couldn’t attract enough buyers. These failures remind investors not to chase “hot” ideas without solid proof.
Today, investors prefer projects with clear science, real demand, and the ability to succeed under current rules, not just future hopes. They want strategies with:
Early cash flow (like pre-selling credits),
Risk protections (like insurance),
Strong community and buyer partnerships, and
Support from public funds or development banks.
Carbon Tide meets these expectations by building high-quality, well-insured projects, securing long-term partnerships, and using blended finance models. This kind of approach is what smart investors are looking for — safe, impactful, and scalable carbon investments.
Competitive Landscape of Carbon Market in 2025
A global leader in carbon project development and climate consulting, headquartered in Switzerland.
Strengths:
broad project portfolio across continents and project types
Wide network,
early mover advantage.
Challenges:
Faced backlash over a controversial REDD+ project in Zimbabwe.
Critics said credits were over-issued and communities didn’t benefit.
Takeaway:
Big players can stumble on integrity. Carbon Tide can shine by being transparent and community-focused. They remain a formidable competitor, especially in corporate deal-making, but newer players focusing on transparency and equitable benefit-sharing (areas where South Pole was hit hardest) can differentiate themselves.
A U.S.-based, known for selling REDD+ credits with strong storytelling around forest protection and communities.
Strengths:
Great at marketing and building emotional connections.
effectively communicate the narratives behind projects (e.g. employing former rangers, protecting endangered species)
Challenges:
Depends heavily on REDD+, which is under scrutiny.
If the market shifts to removals or jurisdictional programs, they may struggle.
Takeaway:
Everland tells a great story, Carbon Tide must do the same but with broader project types and verified results. For Carbon Tide or others, focusing on innovative models could be an edge over Everland.
A California-based tech startup using AI and satellites to monitor forests and verify carbon storage. They’re has become a prominent MRV innovator in forest carbon
Strengths:
Uses machine learning and satellite data to monitor forests and estimate carbon storage, aiming to make verification more efficient and reliable.
attracted substantial VC funding (over $60 million) and clients like Microsoft.
reduces verification costs/time and provides independent checks on project performance, which boosts buyer confidence.
Challenges:
Not all standards fully accept tech-only MRV yet.
Focused mostly on forest projects.
competition in the digital MRV space (e.g. ClimateTrace, Drones companies, etc.)
Takeaway:
Not a direct competitor in projects, but could be a valuable partner for MRV. Staying current with tech like this is key. However, if Pachama starts funding its own projects or if buyers prefer going through Pachama’s platform for assurance, it might divert demand. Staying abreast or partnering on digital MRV could be important to remain competitive on quality claims.
A cleantech company offering insetting solutions in the concrete industry. CarbonCure’s technology injects captured CO₂ into concrete during mixing, where it mineralizes and gets permanently stored.
Strengths:
Verified method for permanent carbon removal
Each batch of concrete made with their tech can yield verified carbon removal credits
Have a verifiable methodology under Verra for these credits and have generated and sold thousands of tons worth to buyers seeking permanent removals
strong corporate backing from Amazon’s Climate Fund and Breakthrough Energy
Challenges:
Sector-specific and not scalable across all industries.
The supply of credits from CarbonCure depends on adoption by concrete plants, which is growing but relatively small compared to global offset demand.
Must keep technological leadership and expand to more plants worldwide
Takeaway:
Represents how carbon credits are expanding beyond forests. A diverse project portfolio can help Carbon Tide stay relevant. They are not direct rivals to nature-based developers, but they do compete in the sense that a buyer looking for permanent removal might choose a CarbonCure credit over, say, a forestry credit.
Carbon Tide’s Differentiation
How we differentiate:
Strong focus on transparency and community benefits
Deep local expertise across Southeast Asia
Willingness to embrace tech (e.g. satellite MRV) without losing human oversight
Flexible, collaborative approach (with governments, locals, and financiers)
This positions us well against larger, more bureaucratic firms that may lack local nuance or trust. Our strategy moving forward should focus on integrity, innovation, and regional strength in ASEAN.
Future Outlook: Carbon Markets Toward 2030
Global Quality Benchmark and Transparency
By 2030, we may see something akin to an ISO standard for carbon credits or a globally accepted quality framework. The Core Carbon Principles (CCP) launched by ICVCM could evolve into a widely adopted benchmark such that any credit on the market carries a clear label of quality tier. This would significantly stabilize pricing – no more extreme variance due to uncertainty, as buyers could trust the label.
Carbon-as-a-Service & Integration into Business Models
Carbon management could become embedded in corporate operations via Carbon-as-a-Service offerings. Instead of one-off offset purchases, companies might subscribe to services that continuously measure their footprint and automatically procure credits in real time to compensate for residual emissions. For example, supply chain platforms might include an option where every shipment’s emissions are tracked and immediately neutralized by purchasing from a pre-vetted project pool. It’s plausible that by 2030, many large enterprises will have internal carbon prices and automated offset procurement as part of their net-zero strategies. This effectively mainstreams carbon finance into ESG and operational management – potentially facilitated by fintech, where purchasing a carbon credit is as easy as an API call. It also aligns with consumer-facing integration: e.g., flight booking systems might auto-add offsets.
MRV Revolution Enabling Small Players
Advancements in remote sensing, drones, IoT, and AI will likely make carbon project monitoring so cost-efficient that even smallholder and community projects can be included at scale. By 2030, a small village that plants trees on communal land could generate certified credits without exorbitant costs – perhaps through national platforms or cooperative aggregators that use satellite monitoring and smart algorithms. We might see millions of small farmers or landowners monetizing carbon via mobile apps, similar to how micro-entrepreneurship has been enabled by mobile banking.
Premiumization and Differentiation of Credits
Not all carbon credits will be equal (nor are they now). By 2030, we foresee a stratified market where “premium” credits command very high prices due to their additional benefits or scarcity. For example, credits that also restore critical biodiversity or those that significantly improve livelihoods in least-developed communities may fetch top dollar from buyers with CSR goals. Already we see hints: blue carbon and agroforestry credits soared in price in 2024. This trend could evolve into clearly segmented products, Carbon+Bio credits, Carbon+Community credits, etc. Corporate buyers might want a portfolio.
Dominance of Compliance-Linked Supply & Evolving Roles
By 2030, especially if Article 6 is fully functional, a significant portion of supply may come from country-authorized credits – essentially quasi-compliance credits being sold to either other countries or voluntary buyers who want assurance their credit isn’t counted elsewhere. We might see national carbon funds or platforms that bundle projects and issue authorized credits. The earlier “fragmented voluntary market” might consolidate into bigger programs. For example, instead of 50 separate REDD+ projects in Indonesia selling individually, there may be one national or provincial program generating credits.
Larger Market Size with Possibly Higher Prices
If optimistic scenarios hold, by 2030 the voluntary market could indeed be tens of billions in value, and compliance markets even larger as more countries add carbon pricing. Carbon prices themselves, in high-ambition pathways, could be much higher. The IMF and World Bank have advocated for a global carbon price floor (e.g. $75/ton for developed countries by 2030) – if something like that comes to pass via coordinated policy or club mechanisms, it will lift prices across the board, including offsets. Some analysts predict that to achieve net-zero, carbon prices might need to exceed $100 or even $200/ton for certain high-quality removals. So one scenario is a market where low-quality offsets have been phased out, and the average credit sold is maybe $30-50/ton, with premium removals $100+, making many currently borderline projects financially very attractive.
Integration with Corporate Net-Zero and Supply Chains
By 2030, offsets/credits might be routinely integrated into supply chain decarbonization strategies. For example, a multinational might require its suppliers to either cut emissions or purchase offsets as part of procurement criteria. This effectively channels voluntary market demand through corporate supply chains. It’s another way carbon finance flows could scale – not just via CSR budgets but via procurement and operations budgets. It could also lead to more insetting models where companies invest in emissions reduction projects that directly affect their scope 3 emissions.
All these outlook points suggest a 2030 carbon market that is bigger, more integrated, and more mature – yet still needing to scale further for 2050 goals.
Summary
The global carbon market is rapidly evolving as climate targets and regulatory frameworks expand. Voluntary carbon markets (VCM) fell from a $2B peak in 2021 to $535M in 2024 due to credibility concerns, but forecasts project $10–25B by 2030 and up to $100B+ by 2050. Compliance markets, led by the EU ETS, reached nearly $1T in 2023 and continue to grow, covering 23% of global emissions.
Key trends include a shift to high-integrity removal credits (e.g. biochar, DAC), premium pricing for projects with social and biodiversity co-benefits, and growing use of tech like satellite MRV. Carbon prices may exceed $100–$200/ton by 2030 in high-quality scenarios, making many borderline projects financially viable.