Unpacking Carbon Pricing & Complexity: Key insights from industry experts

The carbon market is evolving rapidly, but opacity around pricing and quality continues to challenge market participants. At our recent Climate Week NYC panel Know the Real Cost: Unpacking Carbon Pricing, industry leaders gathered to discuss how better data and transparency can help navigate this complex landscape.

Panellists:

Nick Osborne, VP - Global Carbon and Environmental Products Trading, Shell Energy

Ricky Ma, Global Program Manager, Climate Action, Takeda

Stuart Rowland, Co-Founder & CEO, Revalue Nature

Aaron Tam, Product Director, Market Data, Sylvera

Rory Trevelyan Thomas, General Manager, Market Data, Sylvera

How much more are buyers willing to pay for quality?

One of the clearest trends emerging from our Market Intelligence is the clear willingness of buyers to pay premium prices for higher-integrity credits. Our analysis shows that the average price paid per credit retired has increased year-over-year, driven largely by a growing share of higher-priced, higher-quality projects in the retirement mix.

Our data reveals a gradual but consistent reduction in the proportion of lower-priced credits being retired. The declining share of credits priced at $5 and below - represented by the red, orange, and amber segments in our retirement price analysis below - demonstrates a sustained shift toward higher-value credit purchases across the market.

The experts highlighted how small variations at this end of the market may not sound like a lot, but a dollar on a $5 project is a 20% rise, showing how these seemingly small increases represent significant market premiums.

This trend reflects the transition to more stringent methodologies - VM48 for REDD+, VM47 for ARR, and newer cookstove methodologies (see below) - that require more rigorous certification processes but can command higher prices due to their enhanced integrity.

How are co-benefits affecting price premiums?

The data reveals another growing market dynamic: buyers increasingly value projects for attributes beyond pure carbon impact. Our analysis of pricing by co-benefit scores shows clear premiums for projects delivering additional environmental and social outcomes.

The pricing differential becomes particularly pronounced in projects with higher co-benefit scores, with ARR projects demonstrating the most significant premiums for those achieving four or more co-benefits. This data-driven evidence supports the growing recognition that environmental and social co-benefits translate directly into market value.

Ricky Ma from Takeda explained how nature-based solutions often offer very strong alignment towards the company’s values. For example, there are co-benefits around clean air and water, biodiversity, and increased health outcomes that align well with Takeda’s patients' trust and reputation values.

And, a trend toward value alignment helps explain the industry-specific preferences emerging in our data. Analysis from Sylvera's Buyer Directory reveals significant shifts in how different industry sectors approach carbon credit procurement. 

Professional services firms, for instance, have demonstrated increased uptake of cookstove projects within the household and community category, while demand for renewable energy credits has continued to decline across technology, industrial, energy and utilities, and professional services sectors. These patterns reflect strategic alignment between corporate values and project characteristics beyond pure carbon impact.

How is compliance integration reshaping the market?

Perhaps the most significant structural shifts in the carbon markets is the increasing integration of project-based credits into compliance schemes. Our comprehensive eligibility mapping exercise across 22,000 projects reveals the growing potential for credits to serve compliance demand across various ETSs, domestic schemes, and international frameworks like CORSIA.

The experts outlined how policymakers view this integration, with carbon credits being seen as a way to make it easier for jurisdictions to transition and lower the effective average cost for regulated companies. They also provide carbon price signals to uncovered sectors such as forestry and agriculture.

This compliance demand represents a fundamental shift from the historically voluntary-driven market, with some panellists suggesting this trend will continue until towards being even further compliance-led in trajectory.

Are steady retirements masking underlying market challenges?

Credit retirements reached 31.86 million in Q3 2025. Although this represents a decrease from the record 40.45 million credits retired in Q2, it closely matches Q3 2024 levels of 31.49 million, positioning 2025's total retirement volume to approach record highs.

While 2025 is trending basically in-line with record retirement volumes, market participants have been reporting mixed signals. Despite high retirement levels, spot market conditions remain soft, with increasing activity shifting toward upstream investments and offtake agreements rather than spot transactions.

Is it helpful to think of carbon credits as ‘products’ rather than ‘commodities’?

A key theme throughout our discussion was the fundamental question of how to think about carbon credits. A compelling case was made against the commodity mindset, and how buyers can purchase a carbon credit for prices from $3, $10 or $30, up to $100 or even $600. This creates a unique market that is unlike any other ‘commodity’. And so one way to change the view of this is to pivot to seeing carbon credits as ‘products’ - as differentiated products receive differentiated prices.

This perspective helps explain the persistent price spreads across the market and suggests that rather than racing toward commoditization, the market may be maturing toward more sophisticated product differentiation - similar to, for example, specialty coffee or luxury goods markets.

From the viewpoints of our experts, what’s next?

As the market continues to evolve, several key themes emerged for navigating the path forward:

Design for the future, not today: Project developers and buyers need to consider where standards and requirements will be in 2030, not just where they are today. This forward-looking approach is essential for projects with decades-long lifespans.

Collaboration over isolation: The market works best when buyers, regulators, financiers, and suppliers work together rather than operating in silos. The most successful outcomes emerge from collaborative approaches to standard-setting and market design.

Education and clear guidance: Significant education gaps remain, particularly at the C-suite level, around carbon removals, market mechanisms, and accounting standards. Clear guidance is essential for market confidence and business buy-in.

Key takeaways

For corporate buyers

• Quality premiums are real and measurable: Data shows consistent willingness to pay higher prices for enhanced integrity methodologies
• Co-benefits drive value: Projects with strong environmental and social co-benefits command significant price premiums, particularly in ARR categories
• Sector alignment matters: Different industries show distinct preferences for project types that align with their corporate values and stakeholder expectations
• Compliance readiness is essential: As voluntary and compliance markets converge, ensuring credit eligibility across multiple schemes becomes increasingly important

Project Developers

• Invest in methodological rigor: Higher integrity methodologies command premium prices that more than offset additional certification costs
• Design for future standards: Build projects to exceed current requirements and anticipate 2030+ compliance criteria
• Co-benefits are revenue drivers: Quantifiable environmental and social benefits translate directly into pricing premiums
• Compliance eligibility is non-negotiable: Systematic evaluation of current and future compliance scheme requirements is essential for long-term viability

Investors

• Portfolio valuation requires comprehensive data: Understanding both spot prices and forward curves is essential for accurate portfolio assessment
• Quality-adjusted returns: Higher-rated projects demonstrate more stable and predictable value appreciation
• Compliance eligibility creates value floors: Projects eligible for multiple compliance schemes offer downside protection and upside potential

How does Market Intelligence address these challenges?

Against this backdrop of complexity and opacity, at Sylvera we’ve recently launched our Market Intelligence product suite. 

Built on live integrations with 19 registries and covering over 22,000 projects, the platform addresses many of the core challenges discussed - by bringing unprecedented transparency to carbon pricing and market dynamics.

Key capabilities include:

• Comprehensive price coverage: Spot price estimates for over 20,000 credits, with 7 market indices
• Real-time market data: Live integration across registries providing weekly snapshots of issuances, retirements, and market activity
• Buyer directory: Database of nearly 40,000 beneficiaries with industry and geographic views 
• Compliance eligibility mapping: Systematic tagging of projects for eligibility across compliance schemes
• Quality-adjusted insights: Integration of Sylvera's Ratings with pricing and market data for quality-adjusted analysis
• Forward-looking analysis (coming soon): Development of forward price curves and demand modeling for long-term market visibility

Market Intelligence was designed to enable market participants to move beyond anecdotal planning and price speculation toward data-driven decision-making. So, whether you're a corporate buyer trying to benchmark fair prices, an investor valuing your portfolio, or a project developer understanding future demand signals, the platform provides the transparency needed to navigate this complex market.

Interested in exploring these market dynamics yourself? Get a free demo here, and see how comprehensive Market Intelligence can support your carbon strategy.