In a year that tested the resilience of global green finance, the primary carbon offset market has emerged stronger and more focused, expanding by an impressive third to reach a $15.8 billion valuation in 2025. New data reveals a significant professionalisation of the sector; despite shifting political winds, the market nearly doubled its activity with 528 major announcements, up from 274 in the previous year. This growth reflects a clear shift towards quality, as the industry moves away from short-term trading in favour of secure, long-term partnerships. By prioritising high-integrity removals and transparent methodologies, the industry is successfully decoupling from broader market volatility and establishing carbon credits as a sophisticated, essential asset class for a net-zero future.
Market analysts reviewing carbon data in a modern office, with a forest visible through a window in the background. AI generated picture.
Forward transactions served as the primary engine for this expansion, more than doubling in value to an estimated $7.3 billion. This surge was largely fuelled by a corporate rush to secure engineered and nature-based CO2 removals. US technology giant Microsoft emerged as a dominant force, accounting for four of the five largest offtake deals of the year and securing offsets equivalent to 64 million tonnes of CO2. This corporate appetite for forward deals has helped offset a decline in traditional equity funding, which fell to $1.2 billion as venture capital pivoted sharply toward artificial intelligence. As Forbes noted in its year-end review, 'Venture capital is undergoing a dramatic polarisation in 2025. At one extreme, massive mega-rounds are flowing almost exclusively to AI companies.' Despite this shift, dedicated carbon funds managed to raise $3.5 billion, focusing heavily on nature-based solutions and compliance instruments like Australian Carbon Credit Units.
The market’s progress is particularly notable given that the global landscape became significantly more precarious over the last twelve months. With the highest number of conflicts recorded since World War Two, international cooperation on environmental matters has faltered, culminating in a limited political outcome at the COP30 talks in Belem. Government grants for carbon projects reflected this instability, dropping to $1.6 billion from a 2024 record of $3.6 billion. A market observer suggested that this loss of government backing has 'withdrawn a key pillar of growth for the carbon market.' However, the looming 2030 and 2040 deadlines are forcing the private sector to act independently of political cycles. While some firms have backtracked on their commitments, the majority have stayed the course, likely motivated by a sense of survival in a fractured world. As the observer noted, 'Maybe increased polarisation makes people want to back their side even more, and you get an increase in climate-related activity.'
Read more: Quality takes the lead: A year-end look at the voluntary carbon market
In terms of specific transactions, the year saw a clear preference for high-integrity removals over traditional avoidance methodologies. Afforestation, reforestation, and revegetation (ARR) led the sub-sectors with $4.5 billion in funding, followed closely by bioenergy with carbon capture and storage (BECCS) at $4.3 billion. Meanwhile, direct air capture (DAC) experienced a relative slowdown, receiving $626 million, though projects like Switzerland’s Climeworks still secured major equity transactions. There was also significant movement in emerging sectors; soil carbon funding rose to $402 million, while biochar and biomass-based removals grew strongly. This shift away from avoidance types like REDD+, which underwent major methodological revisions during the year, suggests the market is clearing out lower-quality projects in preparation for a more robust 2026.
Ultimately, the 2025 data suggests a market that is decoupling from traditional investment trends and government reliance. The transition toward higher-quality credits and the dominance of corporate offtake agreements signal a professionalisation of the sector. As economies adapt to the presence of AI and persistent inflation, the underlying value of carbon appears to be recalibrating. As one market observer concluded, 'What if AI does stimulate GDP growth and economies are healthier? Ultimate carbon buyers are corporates, not consumers. Also, inflation feels like it's everywhere, so why not in carbon prices too?' With prices rising for premium credits and a massive pipeline of forward deals, the carbon market seems to be finding its footing in an increasingly complex global economy.
Read more: Beyond tonnes: How carbon credit co-benefits elevate value
In a year where the primary market reached an unprecedented $15.8 billion, the message for the future is unmistakable: value is now defined by integrity, durability, and a commitment to measurable impact. As global demand pivots sharply toward high-quality removals and verified nature-based solutions, the industry is entering a more selective phase where transparency and long-term ecosystem restoration are the new benchmarks for success. Green Earth’s portfolio is purpose-built for this new era, focusing on projects that go beyond simple offsets to restore vital ecosystems and empower the communities at their heart. With the 2030 deadlines approaching and corporate leaders increasingly securing their future through high-integrity assets, now is the time to transition from observation to action and secure your place in a market built for long-term relevance.
