Understanding Carbon Credit Prices: A Market Analysis

A carbon credit priced at $0.88 per tonne and one priced at $320 per tonne both represent one metric tonne of CO2 reduced or removed from the atmosphere. The difference lies entirely in how that reduction happens and whether it delivers real climate impact.

This price gap creates both risk and opportunity for sustainability leaders. Here, we'll break down current market prices across voluntary and compliance markets, explain what drives price variation, and provide practical budgeting guidance for procurement decisions.

What is the price of a carbon credit?

The average price for carbon credits is $6.34, according to 2025 data from Ecosystem Marketplace. However, carbon credit prices range widely, from under $1 per tonne to over $500 per tonne. This spread exists because the carbon credit method used to achieve that reduction varies enormously.

In the voluntary market, where companies buy credits by choice rather than legal requirement, generic avoidance credits traded as low as $0.88 per tonne in early 2025. Meanwhile, CORSIA-eligible credits (approved for aviation industry compliance) sit around €19 per tonne. Durable carbon removal credits, like direct air capture or biochar, average $320 per tonne or higher.

Compliance markets operate differently. The EU Emissions Trading System (ETS), where participation is legally mandated for certain industries, saw allowances range from €60 to €80 per tonne through 2025. The price gap between voluntary and compliance markets reflects the difference between discretionary corporate commitments and government-enforced emissions caps.

Live carbon prices in the voluntary and compliance markets

Two distinct markets exist for carbon credits. The voluntary market serves companies making discretionary climate commitments. The compliance market covers industries legally required to account for their emissions. Understanding which market you're operating in determines what you'll pay.

Voluntary carbon market prices

The voluntary market in 2025 shows extreme price stratification based on quality. Generic exchange-traded nature-based avoidance credits fell below $1 per tonne in March 2025. At the other end, durable removal credits command significant premiums: biochar credits average around $187 per tonne, while enhanced weathering projects reach $349 per tonne.

What's driving this split? The Integrity Council for the Voluntary Carbon Market (ICVCM) introduced Core Carbon Principles (CCP) that now serve as a quality benchmark. Credits carrying the CCP label trade at multiples of uncertified alternatives. This "flight to quality" means average price figures can be misleading. A sustainability leader looking at market averages might budget $5 per tonne, then discover that credits meeting their integrity standards cost ten times that amount.

Compliance market and carbon ETS prices

Compliance markets require participation from high-emitting industries. Because supply is capped by regulation, prices tend to be higher and more stable than voluntary market averages.

Current reference prices across major systems:

• EU ETS: €66–72 per tonne in early 2025, briefly exceeding €80 in November
• UK ETS: £41–52 per tonne, with prices rising on EU linkage discussions
• California-Québec: $25–29 per tonne at quarterly auctions
• Washington State: $50–64 per tonne
• RGGI (U.S. Northeast): $22 per tonne

European carbon credit market prices

The EU ETS is the world's largest compliance carbon market and particularly relevant for companies operating in the DACH region. Prices experienced volatility through 2025, dipping to the mid-€60s in March amid economic concerns before rebounding above €80 in November.

Several factors drive EU allowance prices: the Market Stability Reserve mechanism, REPowerEU auction volumes, energy market fundamentals, and policy developments. Analyst projections point to average prices near €77 per tonne in 2025, rising to €91–93 in 2026, with potential for €100 or more later in the decade as supply tightens.

One development worth watching: discussions about linking the UK ETS with the EU ETS, announced as a goal in May 2025, have already narrowed the price spread between the two systems.

What determines carbon credit pricing?

Five key factors explain why one credit costs significantly more than another. Understanding price drivers helps when building a procurement strategy that balances cost, quality, and risk.

1. Verification and certification standards

The credibility of a carbon credit depends on independent validation. Registries like Verra and Gold Standard certify that emissions reductions are real, measured, and permanent. A credit without third-party verification is essentially a promise without proof.

The ICVCM's Core Carbon Principles have created a new quality benchmark. In 2024, 1,316 million CCP-approved credits were issued, with 342 million retired. Credits that pass rigorous third-party verification command higher prices because they provide buyers with greater assurance and reduced greenwashing risk.

Price-reporting agencies now publish daily assessments for quality-differentiated benchmarks, bringing transparency to what was once an opaque market.

2. Additionality and permanence

Additionality means the emissions reductions would not have happened without carbon credit revenue. If a project would have been built anyway for commercial reasons, the credits it generates don't represent additional climate benefit.

Consider renewable energy projects. Wind and solar are now commercially profitable in many regions without carbon credit support, which means they often fail additionality tests. This has reduced the supply of cheap credits and shifted demand toward other project types.

Permanence refers to how long carbon stays sequestered. Geological storage or biochar offers near-permanent solutions. Forests, while valuable, face reversal risks from fire or disease. Credits with stronger permanence guarantees command higher prices because buyers can be more confident the climate benefit will last.

3. Project type and methodology

Different methodologies carry different price premiums based on their climate impact and verification rigour.

• Carbon removal actively pulls existing CO2 from the atmosphere (direct air capture, enhanced weathering, biochar)
• Carbon avoidance prevents new emissions from being released (renewable energy, avoided deforestation)

Removal projects are typically the most expensive because their impact is highly measurable and verifiable. In 2020, avoidance credits accounted for over 90% of all credits used. That ratio is shifting. Removal credits are projected to increase 3–6 times by 2035 as companies align with net-zero frameworks that prioritise actual carbon removal over avoided emissions.

4. Co-benefits and SDG alignment

Co-benefits are positive impacts beyond emissions reduction. A reforestation project might protect biodiversity, create local jobs, or improve water quality. A cookstove project might reduce indoor air pollution and improve health outcomes for families.

Credits aligned with UN Sustainable Development Goals are increasingly sought after by companies demonstrating broader ESG impact. The premium for co-benefits reflects both the additional value delivered and the stronger story these credits tell to stakeholders.

5. Vintage and recency

Vintage refers to the year the emissions reduction occurred. A 2024 vintage credit represents carbon reduced or removed in 2024. Recent vintages command significant premiums over older credits.

Why does recency matter? Older vintages may have been verified under less rigorous standards. They also represent past action rather than current climate investment. Buyers increasingly prefer recent vintages because they face less scrutiny and demonstrate ongoing commitment to climate action.

Carbon credit price per tonne by project type

Typical price ranges by project category provide practical reference points for budget planning.

Nature-based carbon offsets

Nature-based solutions use ecosystems to capture and store carbon. Prices vary widely based on methodology and permanence guarantees.

Avoided deforestation (REDD+) sits at the lower price range but faces increased scrutiny on additionality. The core question: would this forest have been cut down without the carbon credit revenue? Proving that counterfactuals are difficult, which is why REDD+ credits have faced criticism.

Afforestation and reforestation projects command higher prices due to verifiable removal impact. You can measure the growth of trees. However, permanence concerns affect pricing since forests can burn or succumb to disease. Blue carbon projects (mangroves, seagrass) earn premiums for high sequestration rates and biodiversity co-benefits.

Technology-based carbon removal

Engineered removal methods include direct air capture, bioenergy with carbon capture and storage (BECCS), biochar, and enhanced weathering. These projects command the highest prices because their carbon removal is highly measurable and offers strong permanence.

Direct air capture literally pulls CO2 from ambient air and stores it underground. Biochar converts organic waste into stable carbon that can be added to soil. Enhanced weathering accelerates natural rock weathering processes that absorb CO2. All three approaches offer permanence measured in centuries or millennia rather than decades.

Technology-based removals are constrained by capital costs and technology maturity, keeping prices elevated but also ensuring high integrity.

Renewable energy and avoided emissions projects

Credits from renewable energy and some avoided deforestation projects typically have lower prices. The challenge is additionality: in many regions, renewable energy is already economically viable without carbon credit revenue.

This category has seen the most significant price compression as integrity standards have tightened. Generic avoidance credits trading below $1 per tonne reflect market scepticism about lower-integrity options. Buyers increasingly question whether these credits represent real climate impact or simply subsidise projects that would have happened anyway.

Carbon credit price forecast and market outlook

The EY Net Zero Centre projects carbon credit prices to rise to $75–125 per tonne by 2035, continuing to $125–175 per tonne by 2050. By 2035, an estimated 30–50% of credits on the market will cost more than $50 per tonne.

BloombergNEF models several scenarios. In a voluntary market status quo, prices reach only $13 per tonne in 2030 and $35 in 2050, which would fail to incentivise investment in high-quality removal. In a removal-focused scenario, prices rise to $42 per tonne in 2030, then $105 in 2032 and $254 in 2037.

Despite rising prices, analysis finds that using high-integrity credits can lower total corporate decarbonisation costs by 45–65% compared to internal abatement measures alone. For hard-to-abate sectors like steel, cement, and chemicals, credits may account for 20–40% of their abatement to 2040.

How to budget for carbon credit costs

Creating a budget that accounts for rising prices and evolving quality requirements involves several considerations.

First, calculate the volume of credits needed based on your emissions footprint and reduction targets. Focus on hard-to-abate and unavoidable emissions rather than using credits as a substitute for operational improvements.

Second, determine the quality tier required to support your climate claims:

• Carbon neutral claims: May use a mix of avoidance and removal credits
• Net-zero claims: Increasingly require high-integrity removal credits
• CSRD compliance: Requires audit-ready documentation and traceability

Third, plan for price increases. If quality credits average $30–50 per tonne today, budget for $75–125 per tonne by 2035. Early procurement offers cost advantages since prices are projected to rise significantly.

Tip: Companies can purchase spot credits now to offset multiple years of emissions, or use long-term offtake agreements to secure prices and supply.

Why carbon credit quality determines value

The market data is clear: the cheapest credits available often carry significant greenwashing risk and fail to deliver real, verifiable climate impact. Generic avoidance credits trading under $1 per tonne exist for a reason. Buyers with rigorous standards have moved away from them.

Investing in due diligence protects against reputational damage. As CSRD and other regulations tighten disclosure requirements, only high-integrity credits with full traceability will satisfy auditors. Quality credits ensure climate claims are defensible and audit-ready.

Companies seeking audit-ready credits with full traceability can talk to an expert about building a high-integrity portfolio.