The global carbon credit market in 2024 remained stagnant, valued at around US$1.4 billion, per MSCI report. Demand for carbon credits—measured by the number of credits “retired” or permanently used—did not grow significantly. Carbon prices, meanwhile, continued to fall.
However, the market is showing signs of potential growth. With more companies committing to ambitious climate goals and new policies emerging, experts believe the market could expand significantly.
- By 2030, the market is projected to reach between $7 billion and $35 billion, and by 2050, it could climb to $250 billion.
Carbon Credits in 2024: Key Numbers
Carbon credits allow businesses and governments to offset their greenhouse gas emissions. Each credit represents one ton of carbon dioxide either reduced or removed from the atmosphere. These credits come from a variety of projects, including:
- Nature-Based Solutions: Reforestation, forest conservation, and soil carbon storage.
- Renewable Energy: Projects like wind and solar farms that replace fossil fuel-based energy.
- Carbon Capture Technologies: Direct air capture or storing carbon in the soil through biochar.
When companies buy and retire these credits, they use them to meet their climate targets, like achieving net-zero emissions.
By the end of 2024, the carbon credit market had grown in some areas, even if overall demand remained flat. The MSCI report shows the following achievements last year:
- Projects: Over 6,200 carbon credit projects were registered worldwide.
- Issuance: These projects issued 305 million tons of credits (MtCO2e) in 2024 alone, bringing the total to over 2.1 billion credits since the 2016 Paris Agreement.
- Retirements: Only 180 million credits were retired in 2024, roughly the same as in 2023.
Of the credits retired in 2024:
- 91% came from projects that reduce emissions (e.g., renewable energy or forest protection).
- 9% came from projects that remove carbon from the atmosphere, such as reforestation.
Falling Prices
Despite the growing number of carbon credits issued, their prices have dropped. In 2024, the average price of a carbon credit fell to just $4.8 per ton, a 20% decline compared to 2023.
Prices vary depending on the type of credit:
- Nature-Based Projects: These often fetch higher prices because they are seen as more reliable and long-lasting.
- Technology-Based Projects: Carbon capture and other engineered solutions command even higher premiums due to their permanence and innovation.
Why the Market Is Stuck But Shows Signs of Growth
Even with more companies announcing climate goals, the carbon credit market has struggled. Several factors have contributed to this stagnation.
One is the concern about quality. Questions about the reliability and impact of some projects have undermined trust. Another is the lack of urgency as many companies have climate targets set far into the future, reducing the immediate need to buy credits.
Lastly, negative publicity also impacted carbon credit markets heavily. Reports of fraud and overestimated project impacts have hurt the market’s credibility. As a result, demand (retired credits in the chart) has remained steady but unimpressive, and prices continue to drop.
Despite these challenges, there are promising signs that the carbon credit market could soon expand.
In 2024, more climate commitments were reported. Over 2,700 companies set science-based climate targets, a 65% increase from 2023. As deadlines approach, many companies will need to rely on carbon credits to meet their goals.
Additionally, policy improvements and new standards like the Core Carbon Principles (CCPs) aim to improve the quality and integrity of carbon projects. These alleviated trust in the market.
These factors could boost demand for high-quality credits and push the market out of its current stagnation. So, what does this year look like for carbon credits?
2025: A Year of Transition
The year 2025 and beyond hold immense potential for growth and impact. It marks a pivotal moment for the carbon market as it transitions toward greater maturity and alignment with global climate goals.
Demand for carbon credits could rise steadily, driven by companies ramping up efforts to meet their 2030 emissions reduction targets. As more organizations integrate carbon offsets into their climate strategies, the emphasis will shift toward high-quality carbon removal credits (CDR), which are increasingly considered essential for achieving net-zero emissions.
According to the Deloitte report, robust CDR credit sales and high prices highlight market confidence in carbon dioxide removal methods for achieving tangible removals. Elevated pricing offers a potential revenue stream. This enables emerging renewable energy providers to collaborate with CDR projects and secure a share of the generated credits.
This growing demand is likely to push prices higher, especially for credits that meet stringent integrity and additionality standards.
The aviation sector is anticipated to emerge as a significant player in the carbon market. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will enter its first mandatory phase in 2027, but airlines could begin preparing earlier by purchasing credits to offset their emissions. This development will further bolster demand and drive innovation within the voluntary carbon market.
Policy advancements will also play a crucial role in shaping the market in 2025. The continued implementation of Article 6 of the Paris Agreement, alongside national regulations like the EU’s Green Claims Directive and the U.S. transparency laws, will provide clearer guidelines for credit use and enhance market credibility.
However, challenges persist, including addressing fragmented market standards and ensuring robust monitoring and verification systems.
As the carbon market evolves, 2025 will serve as a year of progress and adjustment. This year will lay the groundwork for a more transparent, efficient, and impactful mechanism to combat climate change.
Beyond 2025: Projections for 2030 and 2050
By 2030, the carbon credit market could grow significantly, reaching between $7 billion and $35 billion, according to the MSCI analysis shown above. Several trends are driving this potential growth:
- Rising Demand for Carbon Removal Credits: These tend to be more expensive but are considered more credible.
- Corporate Climate Goals: Companies with ambitious targets for 2030 will likely rely more on carbon credits to bridge the gap between their emissions and goals.
- Higher-Quality Credits: Buyers are increasingly choosing credits from projects with higher standards and transparency, which boosts trust in the market.
MSCI’s long-term outlook for carbon credits is even more optimistic. By 2050, the market could be worth between $45 billion and $250 billion, driven by:
- Urgent Corporate Demand: Many companies will be nearing their net-zero deadlines by 2050, increasing the need for offsets.
- Shift to Removal Credits: Around two-thirds of the market value by 2050 could come from credits that actively remove carbon.
- Engineered Solutions: Technologies like direct air capture could become key players, with their market value potentially reaching $42 billion.
A Market Worth Watching
The carbon credit market may be stuck for now, but the outlook is promising. With stricter standards, growing corporate commitments, and innovative solutions, the market is poised for growth. As 2030 approaches, the demand for high-quality credits is likely to rise, thawing the frozen market and creating new opportunities for businesses and investors alike.
