The global carbon credit market stands at a critical inflection point as we enter 2026. With corporate net-zero commitments accelerating, regulatory frameworks tightening, and integrity standards evolving, understanding carbon credit pricing trajectories has become essential for businesses, investors, and policymakers. This comprehensive analysis examines price forecasts across both voluntary and compliance markets through 2035, revealing stark differences in pricing dynamics, market structures, and investment implications.
Carbon Credit Market Overview: Understanding the Two-Tier System
Carbon credits represent one metric ton of carbon dioxide or equivalent greenhouse gases that have been reduced, removed, or avoided from the atmosphere. The global carbon market operates through two distinct yet increasingly interconnected systems. Compliance markets function under mandatory regulatory frameworks where governments set emissions caps and require high-emitting industries to purchase allowances or credits to offset their emissions. These include established systems like the European Union Emissions Trading System (EU ETS), California's Cap-and-Trade program, and the Regional Greenhouse Gas Initiative (RGGI).
Voluntary carbon markets, conversely, enable companies and individuals to purchase carbon credits beyond regulatory requirements, typically to meet corporate sustainability commitments, achieve carbon neutrality goals, or demonstrate environmental leadership. The voluntary market has witnessed remarkable transformation in recent years, with total market value reaching approximately $2.52 billion in 2025 and projected to expand to $3.04 billion in 2026, according to market intelligence firms.
The distinction between these markets has begun to blur, particularly following the finalization of Article 6 mechanisms under the Paris Agreement at COP29. This convergence creates both opportunities and complexities for market participants seeking to navigate carbon pricing strategies through 2035.
Voluntary Carbon Market Price Forecast 2026-2035
The voluntary carbon market exhibits extreme price stratification based on credit quality, project type, and verification standards. Current market dynamics reveal a widening gap between high-integrity carbon removal credits and traditional avoidance or reduction credits.
Current Voluntary Market Pricing Dynamics
As of early 2026, voluntary carbon credit prices range dramatically from under $1 per ton for generic avoidance credits to over $500 per ton for durable carbon removal technologies. The weighted average spot market price of approximately $5.60 per credit masks significant variation across project categories. High-rated credits are now trading at more than 300% above lower-rated ones, reflecting heightened buyer scrutiny and demand for integrity.
Nature-based solutions currently dominate the voluntary market, accounting for 46% of total demand. These projects, including forestry conservation, reforestation, and afforestation initiatives, typically trade between $8 and $25 per ton depending on quality ratings and co-benefits. Technology-based removal credits command substantial premiums due to their permanence and scalability. Biochar credits average around $187 per ton, while enhanced weathering projects reach $349 per ton, and direct air capture with carbon storage exceeds $500 per ton.
Exhibit 1: Voluntary Carbon Credit Price Ranges by Project Type (2026)
| Project Type | Price Range ($/ton CO2e) | Market Share |
|---|---|---|
| Generic Avoidance Credits | $0.88 - $3.50 | ~35% |
| REDD+ (Forest Conservation) | $8 - $15 | ~25% |
| Afforestation/Reforestation (ARR) | $12 - $25 | ~15% |
| CORSIA-Eligible Credits | $16 - $19 | ~8% |
| Biochar | $150 - $220 | ~3% |
| Enhanced Weathering | $300 - $400 | ~2% |
| Direct Air Capture + Storage | $500 - $600+ | ~1% |
Voluntary Market Growth Projections Through 2035
Market forecasts for the voluntary carbon market vary significantly based on assumptions about corporate climate commitments, regulatory integration, and supply dynamics. Conservative scenarios project the market reaching $7 billion by 2030, while more optimistic outlooks suggest values between $35 billion and $47.5 billion by 2035.
The market is expected to grow at a compound annual growth rate (CAGR) between 20.59% and 40% depending on scenario assumptions. This growth will be driven by several key factors including stronger ESG reporting requirements, heightened climate accountability, increasing corporate net-zero commitments, and growing preference for high-quality removal credits. The agriculture, forestry, and land use (AFOLU) segment alone is projected to expand from $7.51 billion in 2025 to $26.35 billion by 2030.
Price appreciation in the voluntary market will be highly segmented. Generic low-quality credits are expected to face continued downward pressure, potentially declining to $1-2 per ton by 2030. High-quality nature-based solutions may reach $25-40 per ton, while technology-based removals could command $300-800 per ton as supply constraints persist and corporate buyers increasingly prioritize permanence and additionality.
Exhibit 2: Voluntary Carbon Market Value Forecast Scenarios (2026-2035)
| Year | Conservative Scenario ($B) | Base Scenario ($B) | Optimistic Scenario ($B) |
|---|---|---|---|
| 2026 | $1.7 | $3.04 | $4.2 |
| 2028 | $3.5 | $6.8 | $10.5 |
| 2030 | $7.0 | $16.5 | $25.0 |
| 2035 | $16.38 | $47.5 | $95.0 |
Compliance Carbon Market Price Forecasts: EU ETS Leading Global Trends
Compliance markets present a markedly different pricing landscape compared to voluntary markets, characterized by regulatory certainty, mandatory participation, and systematically declining emissions caps. The EU ETS, as the world's largest and most mature carbon market, provides critical price signals that influence global carbon pricing trajectories.
EU ETS Carbon Allowance Price Trajectory 2026-2035
European Union Allowances (EUAs) have demonstrated significant price appreciation in recent years, rising from mid-€60s in early 2025 to above €80 by November 2025. Current market conditions and policy frameworks suggest continued upward pressure on EUA prices through the forecast period.
Multiple forecasting institutions project EU ETS prices to reach €90-95 per ton by 2026, driven by the Market Stability Reserve mechanism, tightening emissions caps aligned with the Fit for 55 package, and robust industrial and power sector demand. By 2030, consensus forecasts converge around €140-150 per ton, with some analyses suggesting prices could reach as high as €157 per ton under favorable conditions.
The 2030-2035 period presents greater uncertainty but also substantial upside potential. Baseline scenarios forecast prices reaching €185-200 per ton by 2035, driven by increasingly stringent emissions reduction requirements, the phase-out of free allowances, and implementation of the Carbon Border Adjustment Mechanism (CBAM). The Market Stability Reserve is expected to maintain price stability through 2035, after which prices could accelerate sharply without system design revisions.
Exhibit 3: EU ETS Carbon Allowance Price Forecasts by Institution (2026-2035)
EU ETS II: The New Frontier for Buildings and Transport
The launch of the EU Emissions Trading System II (ETS II) in 2027 represents a transformative expansion of carbon pricing to previously uncovered sectors including road transport, buildings, and small industries. This system is projected to become the world's most expensive cap-and-trade scheme by 2030.
Initial ETS II carbon prices are expected to begin around €30-46 per ton in 2027, supported by price containment mechanisms and Market Stability Reserve releases. However, forecasts indicate rapid price escalation, with BloombergNEF projecting prices could surge to €149 per ton by 2030. This represents a potential 22-27% increase in road transport bills and 31-41% increase in home heating expenses if costs are fully passed through to consumers.
North American Compliance Market Price Forecasts
California Cap-and-Trade Program Outlook
California's carbon market, the second-largest globally with $44.5 billion in trading value in 2024, faces a critical transition period. The market benefits from a floor price mechanism that increases 5% annually plus inflation, establishing a minimum price of approximately $26 per ton by 2030.
Recent regulatory signals from the California Air Resources Board (CARB) indicate more aggressive tightening measures ahead. Estimates suggest a 15% reduction in the annual emissions cap between 2025-2030, driven by faster reduction rates and decreased banking allowances. Market analysts anticipate California will enter a supply deficit by the late 2020s, creating substantial upward price pressure.
IETA and PwC forecasts suggest California Carbon Allowances (CCAs) will average $39 per ton in the 2023-2025 period, rising to approximately $51-55 per ton by 2030. Considering the legislated floor price escalation and anticipated supply tightening, actual market prices could exceed $60 per ton by 2030 and potentially reach $80-100 per ton by 2035.
Regional Greenhouse Gas Initiative (RGGI) Price Trajectory
The RGGI market, covering 10 northeastern U.S. states, has historically maintained lower carbon prices compared to California and the EU. Current RGGI allowances trade around $17-22 per ton, with price containment mechanisms designed to keep prices between $6 and $13 per ton (escalating 7% annually) established in recent reforms.
IETA forecasts indicate RGGI allowances will average approximately $32 per ton in the 2023-2025 period, rising to $45-50 per ton by 2030. However, recent program revisions tightening the carbon cap through 2030 may prove insufficient to drive significant additional emissions reductions beyond baseline trends. Price appreciation will depend heavily on emission reduction ambitions in key states like New Jersey and Virginia and potential program linkages with other jurisdictions.
Exhibit 4: North American Compliance Market Price Forecasts (2026-2030)
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Key Drivers Shaping Carbon Credit Prices Through 2035
Supply-Side Constraints and Quality Premiums
Supply dynamics present a critical factor in price determination across both market types. In compliance markets, regulatory caps systematically reduce allowance supply, creating scarcity that drives price appreciation. The EU ETS cap declines at 4.3% annually under the Fit for 55 package, accelerating from the previous 2.2% reduction rate.
Voluntary markets face a different supply challenge centered on quality and verification standards. The implementation of Core Carbon Principles by the Integrity Council for the Voluntary Carbon Market (ICVCM) has created a bifurcated market where high-quality, independently verified credits command substantial premiums. Supply of truly durable removal credits remains severely constrained, with current issuance of high-permanence removals representing less than 5 million tons annually against projected demand exceeding 100 million tons by 2030.
Corporate Net-Zero Commitments and Procurement Strategies
Corporate climate commitments represent a fundamental demand driver, particularly in voluntary markets. Over 5,000 companies have established science-based targets, with many requiring carbon credits to address residual emissions. The revised Science Based Targets initiative Net-Zero Standard supports voluntary removal credit use, providing clearer guidance for corporate procurement.
Forward purchasing through offtake agreements has emerged as a critical procurement strategy, particularly for removal credits. Microsoft alone accounts for over 80% of forward purchases in the high-durability removal segment, establishing price benchmarks that influence broader market dynamics. This strategic buying pattern suggests sustained demand growth through 2035.
Regulatory Integration and Article 6 Implementation
The finalization of Article 6 mechanisms under the Paris Agreement at COP29 fundamentally alters market architecture. The establishment of a global two-tier registry system integrating voluntary and compliance systems creates pathways for high-quality voluntary credits to achieve compliance eligibility, particularly through Article 6.4 mechanisms.
CORSIA Phase I implementation requires airlines to offset emissions above 85% of 2019 levels using CORSIA-eligible credits, converting aviation into an anchor buyer for high-integrity reductions and removals. Similarly, the EU's Carbon Removal Certification Framework (CRCF) creates potential pathways to integrate durable removals into the EU ETS by the mid-2030s, likely boosting demand and prices for qualifying projects.
Exhibit 5: Key Price Drivers and Market Impact Assessment (2026-2035)
| Price Driver | Compliance Markets | Voluntary Markets | Time Horizon |
|---|---|---|---|
| Regulatory Cap Tightening | +++ | + | 2026-2035 |
| Quality Standards (ICVCM CCPs) | + | +++ | 2026-2030 |
| Article 6 Implementation | ++ | +++ | 2027-2035 |
| Corporate Net-Zero Commitments | + | +++ | 2026-2030 |
| CORSIA Compliance Demand | ++ | ++ | 2026-2035 |
| Technology Cost Curves (CDR) | + | ++ | 2028-2035 |
| Free Allowance Phase-Out | +++ | - | 2026-2034 |
Impact Scale: +++ (Very High), ++ (High), + (Moderate), - (Negligible)
Source: Author's analysis based on Sylvera, ICVCM, BloombergNEF, and regulatory documentation (2025-2026)Regional Market Dynamics and Geographic Price Divergence
Asia-Pacific: The Emerging Market Powerhouse
The Asia-Pacific region is rapidly becoming the center of gravity for carbon market growth, with forecasts suggesting the voluntary market could expand at a staggering 36-58% CAGR through 2030. China leads through massive renewable energy deployment and methane abatement initiatives. India is transitioning from voluntary participation toward compliance under its Carbon Credit Trading Scheme, opening substantial domestic demand.
Indonesia's peatland restoration projects, forestry investments, and participation in regional alliances like the Asia Carbon Alliance further accelerate both supply and credibility. Despite this growth, Asia-Pacific pricing remains below European and North American levels, with voluntary credits typically trading at $3-8 per ton for nature-based projects and $12-18 per ton for higher-quality initiatives.
North America: Premium Buyer Base with Growing Sophistication
North America maintains position as the largest buyer base, likely capturing 30-37% of global voluntary market share in 2026. Major U.S. technology companies continue signing record-breaking removal credit purchase agreements, establishing price benchmarks that influence global markets. The combination of California's strengthening compliance market, potential RGGI expansion, and corporate voluntary procurement creates a multi-tiered demand structure supporting price appreciation.
Investment Implications and Strategic Considerations for Market Participants
Portfolio Diversification Strategies Across Market Segments
The extreme price variation across carbon credit categories necessitates sophisticated portfolio approaches. Compliance market participants should employ commodity hedging techniques including forward contracts, futures positions, and options strategies to manage price volatility. The EU ETS derivatives market provides substantial liquidity for such approaches, with December 2026 and December 2027 CORSIA futures currently trading around €16 per ton.
Voluntary market buyers face different strategic considerations. High-quality removal credits represent a limited supply asset class likely to appreciate substantially through 2035, suggesting early procurement through offtake agreements may provide significant value. Nature-based solutions offer mid-tier pricing with co-benefit value, while generic avoidance credits face continued price erosion and should be approached cautiously.
Timing Considerations and Procurement Optimization
Market timing presents critical value considerations. Compliance market participants purchasing allowances on spot markets face the choice between immediate procurement to lock in current prices or strategic delayed purchasing betting on potential market downturns. Historical EU ETS volatility suggests hedging strategies that spread purchases across quarterly intervals may optimize cost outcomes while managing cash flow requirements.
Voluntary market participants should prioritize early action for removal credit procurement given severe supply constraints and rising corporate demand. The current 4x price differential between high-quality and low-quality credits will likely expand further as buyers increasingly distinguish between project types. Organizations should evaluate procurement strategies based on their specific carbon neutrality timelines, budget constraints, and stakeholder expectations regarding credit quality.
Risks and Uncertainties in Carbon Price Forecasting
Carbon price forecasts inherently carry substantial uncertainty driven by policy evolution, technological breakthroughs, and macroeconomic conditions. Key downside risks include potential weakening of climate policy ambition, particularly in response to affordability concerns as seen in resistance to ETS II in Poland, Czech Republic, and Slovakia. Economic recession reducing industrial output would decrease allowance demand in compliance markets, potentially depressing prices below forecast trajectories.
Upside risks include faster-than-expected technological cost reductions in carbon removal technologies, which could increase supply and moderate prices, or conversely, accelerated corporate commitments driving demand beyond current projections. Breakthrough developments in direct air capture, ocean-based removal, or biochar production could fundamentally alter market dynamics within the forecast period.
Regulatory uncertainty regarding Article 6 implementation, particularly around corresponding adjustments and host country authorization processes, creates significant price volatility risk in the convergence between voluntary and compliance markets. Market participants should scenario-plan across multiple price trajectories rather than relying on single-point forecasts.
Conclusion: Navigating the Carbon Credit Price Landscape Through 2035
The carbon credit market stands at an inflection point characterized by market segmentation, quality differentiation, and regulatory evolution. Compliance markets, led by the EU ETS, present relatively predictable upward price trajectories reaching €140-150 per ton by 2030 and €185-200 per ton by 2035, driven by systematic cap reductions and mandatory participation frameworks.
Voluntary markets exhibit extreme stratification, with prices ranging from under $1 per ton for generic credits to over $500 per ton for durable removals. This bifurcation will intensify through 2035 as integrity standards tighten and corporate buyers increasingly prioritize permanence, additionality, and co-benefits. High-quality removal credits represent the fastest-appreciating segment with potential to reach $300-800 per ton by 2035.
The convergence of voluntary and compliance markets through Article 6 mechanisms, CORSIA implementation, and potential integration of removals into compliance systems creates both complexity and opportunity. Market participants must adopt sophisticated procurement strategies, employ portfolio diversification approaches, and maintain flexibility to adapt to rapidly evolving market conditions.
Organizations serious about carbon neutrality commitments should act decisively in 2026-2027 to secure high-quality credit supply through offtake agreements, establish hedging programs for compliance obligations, and develop internal carbon pricing frameworks aligned with forecast trajectories. The next decade will separate strategic market participants who anticipated these price movements from those who treated carbon credits as an afterthought, with cost implications potentially reaching billions of dollars for large emitters.
As we progress through this critical decade, carbon pricing will transition from a niche environmental policy instrument to a fundamental business input affecting capital allocation, operational decisions, and competitive positioning across virtually every industry sector. Understanding these price forecasts and underlying market dynamics represents not merely an environmental imperative but a core financial and strategic necessity for corporate leadership in the low-carbon economy.
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