Carbon markets show signs of maturity

New analysis from BeZero Carbon has revealed that carbon markets are maturing as more ‘high quality’ credits are being retired than ever before. The researchers found that businesses are moving away from low-quality credits and are instead seeking those with stronger climate integrity. Since 2022, data shows that the share of retirements rated ‘A’ or higher has more than doubled, while ‘C’ and ‘D’ rated retirements have almost halved[i].

Looking at supply, BeZero Carbon finds that the total issuance of credits has fallen sharply by 50% from a peak in 2022, to 224 million credits in 2025, this has helped to bring issuances closer in line with retirements, therefore rebalancing the market after years of oversupply. However, the researchers flag that credit retirements for higher bands (BBB or above) have exceeded issuance levels since 2022, potentially leading to a scarcity of higher-quality credits moving forward.

Sebastien Cross, co-founder and chief innovation officer at BeZero Carbon, said: “Carbon markets today are incomparable with where we were three years ago. Our analysis shows that businesses are increasingly favouring higher-rated, lower-risk projects.

Integrity is now shaping real market outcomes, whether in which credits are retired or how they are priced. Carbon ratings are a vital part of the information infrastructure needed to give corporate buyers the confidence to scale up investment in climate action.”[ii]

AI growth sees Big Tech buying up carbon credits, leaving smaller players priced out

Carbon markets have seen rapid growth in recent years, as businesses seek to utilise carbon credits as a means to offset emissions and meet their sustainability targets and regulatory requirements.

As noted earlier, demand for high-quality carbon removal credits is accelerating. Significantly, this is in large part attributable to tech giants racing to offset emissions from AI-powered growth, leading to fears around future scarcity.

Firms such as Microsoft and Google have heavily purchased credits, pushing up prices for durable removals (those that capture and lock away carbon long-term) to almost four times higher than traditional forest-based credits. Since 2019, Big Tech has poured hundreds of millions into these solutions, contributing to an estimated $10 billion spent across spot markets and long-term offtake deals, according to CDR.fyi[iii].

Carbon removal is becoming increasingly leaned upon as a method to achieve climate goals, offsetting emissions in sectors still reliant on fossil fuels. Premium credits tied to technologies such as biochar and direct air capture, or projects restoring degraded land, are commanding strong demand for their permanence and reliability.

As AI expansion drives energy use and emissions, companies are reinvesting profits into climate strategies, creating a feedback loop where AI growth fuels both carbon output and offset spending.

References

[i] The Carbon Ratings Agency | BeZero Carbon

[ii] Wheat and chaff: carbon credit market to enter high-integrity supply squeeze | Netzeroinvestor

[iii] CDR.fyi

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