Despite growing demand, supply of European forest carbon credits remains limited, thanks in no small part to shifts in the overall voluntary carbon market.
According to a new report from carbon removal project developer Arbonics, large corporate buyers are no longer focused as much on the volume of credits they buy but instead on “their quality, transparency, and impact.” These buyers now ask more questions around how credits are generated and evidence supporting carbon removal claims and social and ecological impact.
With most “higher-integrity” projects only just starting to scale, supply hasn’t yet caught up with this type of demand and newer methodologies, says Arbonics’ report. In Europe, this is particularly apparent.
Of the 13.4 million Verra AFOLU (Agriculture, Forestry, and Other Land Uses) credits issued in 2024, just 65,041 came from European projects. Credits are based on vintages from 2018-2022, showing “how long it can take for forest carbon projects to translate into issued credits.”
“What I’m hearing a lot anecdotally is that [buyers] want more localized impact, close to or in the countries where they have operations,” says Arbonics cofounder and COO Lisett Luik. “That demand is increasing for them but supply hasn’t really caught up yet was something that surprised me.”
Prices are already increasing
This year, 2025, is “a critical window for forward-looking companies to take action,” notes Arbonics.
Given their lack of supply, the market for high-quality carbon credits is expected to grow very competitive, which makes it imperative for companies to buy years in advance.
“Companies aiming to meet climate targets before 2050 need to contribute to planting forests now. With demand rising and high-quality supply limited, prices are already increasing.”
Currently, afforestation carbon credits sell for between $20 (for older vintages and lower-quality projects) to $70 per ton of CO2e for top-quality credits. According to EY’s Net Zero Centre Analysis, carbon credit prices will reach $80-150 per ton by 2035.
“Early investment not only helps secure access to credible credits, but also positions buyers ahead of future price increases and regulatory pressures,” notes Arbonics’ report.
Luik notes that one challenge Arbonics frequently faces is managing buyers that want high-quality carbon credits immediately.
“I have to say ‘no’ because those were all promised to someone else five years ago,” she says. “For companies that truly want to invest in high-integrity carbon removal, you need to invest much earlier than at the point you receive your credits.
“Building that supply takes time. With afforestation, it takes time to find a suitable land source, little saplings, plant them, maintain them, monitor them, protect them. There’s a lot that goes into [the project] before the trees are big enough to remove significant amounts of carbon.”
Trustworthy credits still the biggest challenge
In Europe, most forest carbon credits come from either afforestation (establishing a forest in an area with no previous tree cover) and improved forest management, or IFM. (Avoided deforestation is less relevant to Europe because of the region’s strict existing regulations.)
Within the afforestation segment, Arbonics’ report found that 75% of credits issued were for IFM projects, and the remaining 25% from afforestation.
Afforestation projects can take years to develop, since trees planted now will need up to a decade to grow and reach their full potential for sequestering carbon.
Because of this, companies investing in forest carbon credits must treat them as part of a long-term climate strategy, notes Arbonics.
Europe remains attractive to carbon credit buyers partly because those credits are some of the most transparent on the market. They are backed by strong legal systems, detailed land records, and region-specific data, and aligned with EU frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the Carbon Removals Certification Framework (CRCF).
Such transparency is critical as trust remains one of the biggest challenges for voluntary carbon markets, according to Luik.
“Buyers are worried they’ll buy something that’s going to end up with them on the front page of the Wall Street Journal, being accused of greenwashing—that’s the ultimate nightmare for every chief sustainability officer,” she says.
Nowadays, however, “there’s been a massive step forward in terms of bringing transparency, and I hope that’s going to help fix this problem of lack of trust by just giving a bit more insight into what’s really going on.”
