Q1 2025 Carbon Data Snapshot

Net zero climate action holds strong despite backlash

• Despite corporate climate action coming under pressure, the voluntary carbon market remained robust over first quarter of 2025
• Sylvera analysis finds a supply crunch looms for high quality credits, with prices to increase as the market matures
• Buyers encouraged to act when investing in climate action, as uptick expected in offtake agreements with early stage projects to secure prices and volume

Carbon credit retirements remained robust over the first quarter of 2025 at 54.56M, according to our Q1 2025 market data analysis. 

In carbon markets, issuances are newly created credits available for trading, while retirements are credits permanently used to offset emissions. Retired credits can no longer be traded, indicating real climate impact. Tracking issuances and retirements helps assess market trends, supply-demand dynamics, and the real impact of carbon offsetting efforts. 

With corporate climate action coming under pressure in recent months, businesses and organisations have been forced to respond to a shift in political and market sentiment towards net-zero corporate action, especially in the USA. 

However, our analysis of market data indicates that market participants have continued to take action on net-zero goals, with credit retirements holding strong. Issuances, meanwhile, declined over the three months, putting the market on track to enter an era of negative net-issuances for the first time, where the number of credits issued is less than those retired. 

This is being driven by the proliferation of higher credit quality and buyers prioritising quality in their investment decisions - and is likely to have a knock-on effect on the future pricing of carbon credits, the latest sign of the market’s maturation.

Key highlights from the carbon markets in Q1 2025

• Q1 2025 issuances stand at 55.63M and retirements at 54.56M, a 1.9% difference, much closer to a negative net issuance compared to Q1 2024’s 83.03M in issuances and 54.69M in retirements, a 51.81% difference 
• In line with the last seven years, REDD+ projects remain the project type with the highest number of Q1 retirements at 15.96M, or a 31% share of project types
• Waste management has reached the highest share of retirements this decade, comprising 10% for 2025 so far, doubling compared to the same period last year. It is a similar picture across biogas and improved forest management (IFM) 
• 60% of this year’s retirements have been credits with a vintage of 3 to 5 years, the ‘Goldilocks Vintage’, indicating that the market seems to be taking vintage as a marker of quality

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Allister Furey, CEO at Sylvera, said: "Despite uncertainties in climate policy and shifting political sentiment, companies are demonstrating resilience in their carbon strategies with demand for carbon credits holding up. This underscores the crucial role carbon markets play in enabling businesses to meet their net-zero commitments, even against the backdrop of a polarising macro environment. 

The market’s increasing focus on higher-quality credits and the prospect of negative net issuances for the first time signals a maturing landscape, one where demand for quality will continue to rise. Encouraging high quality issuances and a market where integrity and impact are driving long-term investment decisions."

Market matures and buyers encouraged to act as net issuances set to turn negative for the first time 

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2025 marks the first year where negative net issuances are set to occur – where more credits are being retired than issued. In previous years, the market had a surplus of 22-42M tonnes. The tightening of supply is likely to drive up prices in the long-term. 

Q1 2025 issuances stand at 55.63M and retirements at 54.56M, a 1.9% difference compared to Q1 2024’s 83.03M in issuances and 54.69M in retirements, a 51.81% difference. A likely driver of this trend is higher credit quality standards with stricter methodologies, which means that higher integrity projects are making it to market compared to previous years and buyers are opting for better quality credits.

This trend could create an urgency for buyers to act, with delay in action mean they could face increasing costs and limited access to these high quality carbon credits. One effect of this is expected to be an increase in early-stage access and investment in pre-issuance projects. 

Companies with significant future need for high quality credits that are finding inadequate supply on the spot market will be looking to agreements with early stage projects to secure prices and volumes.

REDD+ retirements remain strong, but market shows signs of diversification

For the seventh consecutive year, REDD+ remains the project type with the highest number of retirements in Q1, with 15.96M, accounting for 31% of total retirements. However, its share has been gradually declining in recent years, signalling that companies may be shifting away from avoidance-based credits amid growing scrutiny.

Other lesser-known project types are gaining traction, with retirements in waste management, biogas, and improved forest management (IFM) seeing record growth. Waste management credits now account for 10% of total retirements, doubling last year’s share, while biogas and IFM have reached 6.4% and 5.7%, respectively, both more than double their historical averages. 

This trend suggests that companies are diversifying their carbon credit portfolios to align with regulatory shifts, particularly those targeting methane reduction in oil & gas, agriculture, and landfill sectors.

Ben Rattenbury, VP Policy at Sylvera, added: "The year-on-year decline in issuances this quarter and the continued strength of retirements, suggest that buyers are prioritising high-integrity credits that deliver real, measurable climate impact. As regulatory frameworks evolve and governments take a more active role in carbon markets, not only through Article 6 trading but through continued regulatory tightening, we continue to see convergence between voluntary and compliance markets play out. 

This alignment has the potential to drive greater clarity, stability, and credibility in global carbon markets, reinforcing their centrality in delivering net zero. The data proves the market’s maturation and makes the case for buyers to be investing for the long-term.”

A shift in credit retirements: ‘The Goldilocks Vintage’ 

Buyers are moving toward a ‘Goldilocks’ vintage range of 3-5 years, which has doubled in retirement share from 32% in 2021 to 60% today. Fewer credits aged 6+ and credits issued in the last two years are being retired, reflecting market perceptions of vintage as a quality marker. That vintage is not necessarily a quality indicator, so investors should always assess credits based on verified integrity.

Immediate action in an uncertain landscape

The data presents a clear case for continued—and accelerated—corporate climate action despite political uncertainties. Companies that maintain course on climate commitments are creating competitive advantages through:

‍Cost management - Securing high-quality credits as supply constraints look to drive prices higher

‍Market leadership - Developing relationships with premium project developers as competition intensifies

‍Strategic diversification - Gaining early access to emerging credit categories aligned with future regulation

‍Risk mitigation - Building expertise ahead of evolving disclosure requirements and stakeholder expectations

As a leading provider of carbon ratings, tools and data, Sylvera is on a mission to incentivise investment in real climate action. By taking a holistic approach to assessing activity, this quarterly data snapshot shows an undoubtedly strong first quarter for the global voluntary carbon market and encouraging indicators of long-term investment. 

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Methodology

Market data includes retirements and issuances between 1^st January and 31^st March 2025

The data is aggregated across major registries in the voluntary carbon market, including Verra, Gold Standard, American Carbon Registry, Climate Action Reserve, Puro, EcoRegistry, and BioCarbon Standard.

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Have you read our full State of Carbon Credits report?

Interested in a full year view of carbon market data? Our annual State of Carbon Credits report reveals the most important trends impacting buyers and investors across the calendar year.

The report focuses on key areas such as retirements, registry market share, project types, transparency, buyer preferences, quality and price. Read it here. 

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