Is the Circular Economy Actually Profitable? A Global Cost Analysis

Executive Summary

By 2026, carbon credit pricing will no longer behave as a single, unified market. Instead, the voluntary carbon market (VCM)—defined as the market where organizations purchase carbon credits voluntarily to compensate for emissions beyond regulatory requirements—is undergoing a structural bifurcation.

Prices are diverging sharply based on credit integrity, durability, and alignment with credible net-zero pathways. In practical terms, credits that appear interchangeable on paper may differ in value by more than an order of magnitude (10× or more).

For corporate buyers, carbon credits are evolving from a tactical procurement item into a strategic decarbonization and risk-management instrument. For developers and investors, the market increasingly rewards quality over volume.

Defining the 2026 carbon credit price landscape

Indicative voluntary carbon credit prices (2026 outlook)

Credit category	Estimated price range (USD per metric ton of CO₂ equivalent*)	Primary drivers
Low-integrity avoidance credits	$1–5	Oversupply, weak additionality, buyer avoidance
Improved nature-based solutions (NBS)**	$6–15	Stronger methodologies, selective demand
High-integrity carbon removals	$40–150+	Scarcity, durability, net-zero alignment

* tCO₂e (metric ton of carbon dioxide equivalent): a standardized unit that accounts for different greenhouse gases based on their global warming potential.
** Nature-based solutions (NBS): climate mitigation approaches that leverage natural ecosystems, such as forests, mangroves, or soil carbon.

Key insight: By 2026, carbon markets will no longer clear on volume. They will clear on credibility.

Why the market is bifurcating

1. Demand is shifting from “carbon neutrality” to science-based net-zero claims

Historically, many companies purchased carbon credits to support carbon-neutral claims, often without clear differentiation between credit types.

This is changing rapidly due to:

• Investor scrutiny
• Civil society pressure
• Evolving best practices for climate claims

Leading organizations now align with the Science Based Targets initiative (SBTi)—a framework that defines how companies should reduce emissions in line with climate science.

SBTi implication:

• Credits cannot replace emission reductions
• Carbon credits are primarily used for residual emissions—those that cannot be eliminated after deep decarbonization

This shift structurally favors carbon removal credits over avoidance credits.

2. Carbon removals are becoming the “gold standard”

Carbon removals refer to credits that physically remove CO₂ from the atmosphere and store it for long periods.

Common removal pathways include:

• Biochar: converting biomass into stable carbon stored in soils
• Enhanced weathering: accelerating natural mineral reactions to lock away CO₂
• Direct Air Capture (DAC): industrial systems that extract CO₂ directly from ambient air

Why removals command a premium:

• Higher durability (often decades to millennia)
• Clearer alignment with net-zero definitions
• Stronger scientific consensus on impact

As a result, removal credits are increasingly viewed as strategic assets, not short-term offsets.

3. Supply growth cannot keep pace with high-quality demand

Despite strong demand signals, supply growth for high-integrity credits remains constrained by:

• Long project development timelines
• Capital-intensive infrastructure requirements
• Complex monitoring, reporting, and verification (MRV)

MRV (Monitoring, Reporting, and Verification): the system used to measure emissions reductions or removals and ensure credits represent real, quantifiable impact.

This imbalance creates a persistent supply–demand gap, supporting higher prices through at least 2026.

4. Integrity scrutiny is collapsing the low-end price floor

Several initiatives are reshaping quality expectations in the voluntary market:

• ICVCM (Integrity Council for the Voluntary Carbon Market): sets Core Carbon Principles to define high-integrity credits
• VCMI (Voluntary Carbon Markets Integrity Initiative): provides guidance on how companies should use credits in climate claims

These frameworks are:

• Reclassifying legacy credits as low quality
• Creating stranded inventories
• Eliminating the implicit price floor that once supported $3–7 credits

Result: Low-integrity credits are becoming cheaper faster than premium credits are becoming expensive.

Implications for corporate buyers

Carbon credits are no longer a commodity purchase

Leading companies now treat carbon credits as:

• A long-term decarbonization tool
• A reputational risk management instrument
• A hedge against future carbon price escalation

This has led to:

• Multi-year offtake agreements
• Pre-purchases of future removal supply
• Internal carbon pricing above $100 per tCO₂e to guide capital allocation

Portfolio-based strategies are emerging

Best-in-class buyers segment their carbon credit portfolios by:

• Claim type (contribution vs compensation)
• Time horizon (near-term vs long-term)
• Risk profile (reputational, regulatory, delivery)

This mirrors how firms manage energy, commodities, or long-dated infrastructure assets.

Implications for project developers and investors

Volume is no longer enough.

Developers focused solely on scaling volume without addressing integrity risk face:

• Price compression
• Limited buyer interest
• Difficulty securing long-term contracts

In contrast, projects with robust MRV, long-term storage, and transparent governance are attracting strategic capital, not just spot buyers.

Carbon removals resemble infrastructure investments

High-quality removal projects increasingly exhibit long asset lives, predictable cash flows via offtake contracts, and institutional investor interest. This positions removals closer to energy or climate infrastructure than traditional environmental commodities.

Looking ahead: what will define winners in 2026

By 2026, successful market participants will distinguish clearly between avoidance and removal credits, integrate carbon purchasing into core decarbonization strategy, secure access to high-integrity supply early, and treat carbon prices as a signal—not a cost to minimize.

The punchline:

By 2026, carbon credits will no longer be priced by tons alone—but by trust, durability, and credibility.

Organizations that recognize this shift early will gain strategic advantage. Those that delay will find that the cheapest carbon credits are often the most expensive once reputational and strategic costs are accounted for.