Compliance Carbon Credit Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Global Compliance Carbon Credit Market Trends and Insights

Expanding Stringency of Cap-and-Trade Programmes

Mandatory carbon ceilings are tightening across every major jurisdiction, generating structural demand within the compliance carbon credit market. China’s March 2025 inclusion of cement, steel, and aluminum adds 3 billion t CO₂e to regulated coverage, while the EU’s Market Stability Reserve has withdrawn more than 2.3 billion allowances since 2024, anchoring price floors.^{[1]Asia Society Policy Institute, “China Expands National ETS to Heavy Industry,” asiasociety.org} Brazil’s 2024 SBCE law establishes compulsory trading for high-emitting industries by 2030, and India’s CCTS rules lay the groundwork for exchange-based compliance trading from 2026. The UK confirmation in May 2025 that it will link with the EU ETS shows that once installed, cap-and-trade systems rarely reverse course. Collectively, these moves lock in a progressively tighter emissions budget that underpins long-run value in the compliance carbon credit market.

Increasing Corporate Net-Zero Commitments

Corporate buyers are transitioning from basic offsets to removal-oriented credits, which reinforces quality and price premiums. A 2024 Nasdaq survey found that 93% of companies hold carbon credit strategies, and 57% specifically target removals, signaling that voluntary procurement behavior is now influencing compliance segments.^{[2]Nasdaq, “Global Net-Zero Survey 2024,” nasdaq.com} J.P. Morgan Chase and Bank of America together have earmarked USD 2.5 trillion for climate-aligned finance through 2030, explicitly carving out budgets for high-quality compliance credits. The updated VCMI Claims Code introduces Silver, Gold, and Platinum tiers for permanence and additionality, directing demand toward registry-verified assets that can be seamlessly integrated into compliance obligations. Microsoft’s 8 million-tonne removal purchase in 2024 became a benchmark that other corporates emulate, raising the bar for integrity in the compliance carbon credit industry.

Carbon-Border Adjustments Spur Demand

The EU’s Carbon Border Adjustment Mechanism imposes quarterly reporting duties on importers of aluminum, cement, fertilizers, hydrogen, and steel, adding immediate compliance costs for firms outside the bloc. The UK will implement CBAM from January 2027, while California’s Low Carbon Fuel Standard amendment establishes a domestic CBAM-style rule targeting a 30% reduction in carbon intensity by 2030. Because CBAMs credit carbon paid in an equivalent jurisdiction, they have become a catalyst for ETS linking, lifting cross-border liquidity in the compliance carbon credit market. Their trade-policy nature repositions credits from purely environmental instruments to de facto customs clearances.

Article-6 Bilateral Trading Uptake

Governments are turning to Article 6.2 deals to shortcut protracted multilateral talks. Singapore-Rwanda, Ghana-Singapore, and Indonesia-Japan agreements illustrate a template under which states exchange ITMOs while retaining sovereignty over baselines. The UN’s May 2025 adoption of the Paris Agreement Crediting Mechanism rules created a governance backbone; already, 287 projects, led by 89 in Brazil, seek a transition. California’s partnership with Panama further hints at sub-national deployments. As these bilateral tracks expand, cross-border recognition of high-integrity carbon units will deepen liquidity and heighten price coherence in the compliance carbon credit market.

Policy Uncertainty from Political Shifts

Election cycles can stall or dilute climate legislation. Singapore’s financial sector fines rose 22% in 2024, foreshadowing tougher AML/KYC oversight that may raise onboarding costs for carbon desks.^{[3]Fenergo, “Financial Crime Fines 2024 Report,” fenergo.com} Pakistan approved a trading framework in February 2025, but its execution is contingent upon fiscal stability and external financing. In the United States, coordinated CFTC-DOJ-SEC probes into carbon-credit fraud enhance credibility in the long term, yet inflate compliance budgets in the short term. Such unpredictability can defer project-finance decisions and dampen the near-term outlook of the compliance carbon credit industry.

Complex & Fragmented Compliance Rules

Across borders, divergent baselines and leakage tests can inflate transaction expenses, particularly for multinationals that juggle multiple schemes. Gold Standard's June 2024 tracker catalogues mismatched MRV protocols, which complicate cross-jurisdictional transfers.^{[4]Gold Standard, “Carbon Market Regulations Tracker,” goldstandard.org} The EU's CBAM employs a methodology that differs from domestic ETS reporting, whereas the UK's planned CBAM adds a layer. Fragmentation also afflicts forestry offsets where permanence requirements vary widely, creating hidden liabilities that curb issuance in the compliance carbon credit market.

Segment Analysis

By Credit Type: Nature-Based Solutions Command Premium Pricing

Forestry and Land-Use Offsets are on track for a 45.3% CAGR between 2025 and 2030, outpacing Renewable Energy Certificates’ 41.5% 2024 share within the compliance carbon credit market. Premium REDD+ projects regularly fetch double the average voluntary price because removal credits satisfy both regulatory and reputational objectives. Cost-effective natural regeneration registers USD 23.80 t/CO₂, compared to more than USD 600 t/CO₂ for direct air capture, thereby anchoring a bifurcated pricing curve. Even so, studies questioning additionality in 90% of forestry credits have amplified calls for end-to-end digital MRV and third-party audits, helping credible issuers consolidate market trust.

Second-tier categories, such as Energy-Efficiency and Industrial-Process credits, remain relevant where electrification hurdles persist-specifically in steel, cement, and chemicals-providing predictable, albeit slower, growth. Increasingly, corporations blend nature-based removals with industrial abatement to hedge against permanence risk, a trend that widens product diversity within the compliance carbon credit market.

Note: Segment shares of all individual segments available upon report purchase

By Compliance Scheme: Emerging Markets Challenge EU Dominance

EU-ETS allowances generated 74.8% of the 2024 turnover, but "Other" schemes, including New Zealand, South Korea, China, and upcoming Brazil, are expected to post a 50.7% CAGR, reducing Europe's share over time. China's expansion alone adds 3 billion tonnes of coverage, while its CCER relaunch in 2024 reopens a domestic offset pipeline. Meanwhile, South Korea's K-ETS reforms allow banks to trade spot and derivatives, boosting liquidity.

The compliance carbon credit market size attached to the UK-ETS is expected to benefit once the May 2025 EU-UK linking deal is finalized, setting a precedent that could motivate the alignment of California's RGGI. Japan's GX-ETS will transition from voluntary to mandatory by 2026, enrolling more than 550 corporations that collectively emit half of the country's greenhouse gases. Mature North American programs, such as RGGI, enjoy policy continuity but exhibit slower growth.

By Delivery Method: Futures Markets Gain Liquidity

Spot transactions still accounted for 60.2% in 2024, but futures and forwards are scaling at a 43.5% CAGR. CFTC-approved derivatives have made carbon a hedgeable commodity, attracting asset managers and proprietary desks that value two-way markets. Indonesia’s January 2025 launch on IDX listed 1.7 million credits and framed them legally as securities, signalling institutional design innovations from the Global South. Secondary trading of tokenized credits reached USD 21.2 million in 2024, a relatively small amount by commodity standards, yet it represents evidence of widening participation.

Algorithmic liquidity providers cut bid-ask spreads but introduce flash-crash risk. Northern Trust’s blockchain system embeds compliance checkpoints into smart contracts, potentially limiting spoofing and wash trades that can destabilize the compliance carbon credit market.

Note: Segment shares of all individual segments available upon report purchase

By End User: Transportation Demand Outpaces Utilities

Utilities drove 63.6% of 2024 credit usage, reflecting power-sector caps. However, transportation’s 46.4% CAGR dwarfs all others, as airlines under CORSIA and shipping firms face IMO decarbonization rules, chasing aviation-grade or ocean methodology credits. EU and UK sustainable-aviation mandates escalate from 2% SAF in 2025 to 70% by 2050, ensuring a baseline demand pull. The US Department of Energy’s USD 6 billion industrial fund also taps credits for hard-to-abate sectors, further broadening offtake sources.

Industrial manufacturers deploy credits as bridge solutions until breakthrough technologies as green hydrogen and CCUS, scale. Agriculture also adopts soil-carbon projects, but at a moderated pace due to measurement complexities, sustaining a multi-speed dynamic within the compliance carbon credit market.

Geography Analysis

Europe remains the anchor, accounting for 77.4% of 2024 revenues; the EU ETS’ Market Stability Reserve has removed an accumulated 2.3 billion allowances, reinforcing the scarcity that firms have priced into forward curves. CBAM extends that influence overseas by compelling exporters to embed carbon costs in landed prices, a design that indirectly enlarges the compliance carbon credit market.

The Asia-Pacific region is the growth engine, forecasted to grow at a 44.8% CAGR. China’s expanded ETS coverage, the relaunch of CCER, and the exploration of EU linking signal a policy tilt toward carbon-market centrality. Japan’s GX-ETS will transition to auctions by 2033, and South Korea’s reforms now permit banks to act as intermediaries, while ASEAN members explore Article 6 credits to monetize forestry assets. Collectively, these steps institutionalise the compliance carbon credit market across the world’s manufacturing hubs.

North America shows mixed momentum. California’s LCFS requires 30% CI cuts by 2030 and 90% by 2045, fueling regional demand. Federal initiatives, including a USD 6 billion industrial decarbonisation fund, offset political gridlock at the congressional level. Canada’s Output-Based Pricing System harmonises provincial differences and allows inter-provincial trading. Latin America’s prospects brighten with Brazil’s SBCE law, while Zimbabwe’s first blockchain registry positions the continent as a credible supplier of high-integrity credits. These parallel developments collectively deepen the liquidity pool of the compliance carbon credit market.