Carbon credit market on track for negative issuance indicating first signs of rebound

The voluntary carbon market may be poised for a turnaround, according to new analysis by carbon data platform Sylvera, which shows strong demand for high-quality credits despite recent pricing pressures and political pushback.

Carbon credit retirements, a key measure of climate action, held firm in the first quarter of 2025 at 54.56m, nearly matching new issuances at 55.63m. That narrowing gap puts the market on track for negative net issuance for the first time, a sign that more credits are being used to offset emissions than are entering the system.

The findings come after a difficult period for the carbon market, which has seen prices fall from their peaks in the early 2020s amid a broader backlash against corporate greenwashing and doubts over the integrity of some credit types. However, Sylvera suggests a maturing market is emerging, one increasingly focused on credit quality and long-term investment.

“Despite uncertainties in climate policy and shifting political sentiment, companies are demonstrating resilience in their carbon strategies,” said Allister Furey, CEO at Sylvera. “The market’s increasing focus on higher-quality credits and the prospect of negative net issuances signals a landscape where demand for quality will continue to rise.”

This shift is already being reflected in buyer behaviour. Credits from REDD+ projects remained the most commonly retired, at 31% of the total, but growing volumes from waste management, biogas and improved forest management suggest companies are diversifying their offset strategies. Waste management credits, for instance, doubled their share of retirements compared to the same period last year.

There is also growing interest in credits from the so-called ‘Goldilocks vintage’, those aged three to five years, which now make up 60% of retirements. This suggests buyers are increasingly using vintage as a proxy for quality, although Sylvera cautions that vintage alone is not a sufficient indicator of integrity.

The expected tightening of supply, as stricter standards limit the volume of new credits coming to market, may begin to push prices upward again. Sylvera expects more early-stage investment and offtake agreements as companies look to secure long-term access to high-integrity credits before costs rise further.

“The convergence of voluntary and compliance markets, combined with regulatory clarity and an emphasis on integrity, may help restore confidence,” said Ben Rattenbury, Sylvera’s VP of Policy. “The data points to a market that’s growing up, and buyers would do well to act early.”

The turnaround comes amid growing demand from institutional investors across Europe as pension funds and other long-term asset owners are increasingly exploring investments in natural capital including investments in the voluntary carbon credit market.