Carbon credit retirements stay strong despite market slump. (Photo: iStock)
The non-profit Ecosystem Marketplace (EM) released its latest research on May 29, revealing that the voluntary carbon market (VCM) has reached its lowest transaction volume in six years. Total market value dropped by 29% year-on-year, while average credit prices fell 5.5%. Still, retirements of carbon credits remained strong, suggesting continued demand despite mounting market pressure.
Carbon credit volume drops 25% in 2024
According to the report, the total carbon credit transaction volume declined by 25% in 2024 compared to the previous year, with market value dropping to USD 535 million. However, both figures represent smaller declines than those seen in 2022, suggesting the market may be slowly recovering. Carbon credit retirements based on the top 10 global standards amounted to 182 million tonnes of CO₂ equivalent—near the highs seen since 2021.
Charlotte Barber, Deputy Director at EM, noted that the market built on older methodologies is fading, while a new generation of voluntary carbon markets is emerging. Although the supply of credits from these new projects has yet to meet demand, stable retirement volumes indicate that end-user corporate demand remains firm.
A closer look at retirements shows that forestry and land-use credits became the largest category in 2024, offsetting 68 million tonnes of emissions. This shift was driven by a drop in retirements from renewable energy projects.
The total carbon credit transaction volume declined by 25% in 2024 compared to the previous year, with market value dropping to USD 535 million. (Chart: 2025 State of the Voluntary Carbon Market)
Removal credits command premium prices
Waste disposal was the only category to see growth in both transaction volume and market size, with both more than tripling from the previous year. This surge was largely driven by the Integrity Council for the Voluntary Carbon Market (ICVCM) granting Core Carbon Principles (CCP) approval to landfill gas methodologies, sparking sharp increases in demand.
In terms of pricing, carbon removal credits continue to command a significant premium—381% higher than avoidance credits, up 136 percentage points from 2023. Buyers also showed a strong preference for newer vintages: credits issued within the last five years traded at a 217% premium compared to older vintages, an unusually high triple-digit margin.
Ricardo Bayon, Co-Founder and Partner at Encourage Capital, commented that the carbon market is going through its fifth or sixth cycle of rapid growth, decline, and recovery. While 2024 may be a downturn, he emphasized that for those familiar with the market, this is simply part of a normal fluctuation, not a signal of long-term collapse.
Source: Ecosystem Marketplace
