Read more in the December 5 edition of Invert Insights.
The 2025 IETA Greenhouse Gas Market Report concludes that carbon markets have moved beyond experimentation and are now central infrastructure for achieving global climate goals. What began as an abstract concept two decades ago to use market forces to reduce emissions has matured into a complex, interconnected ecosystem shaping investment decisions, national climate strategies, corporate action, and international cooperation.
Across the report’s findings, a consistent theme emerges: the world is entering a new carbon order. One defined by integration, digitalisation, higher integrity, and a more direct alignment between climate ambition and market mechanisms.
The report documents that carbon markets are expanding faster than at any point in history. Emissions Trading Systems (ETS) now cover nearly a quarter of global emissions, and this share is expected to double within a decade. Regions across Asia, Latin America, and Africa are launching new systems, while established markets like the EU ETS and North American subnational programs deepen liquidity and sophistication.
At the same time, voluntary carbon markets (VCM) are undergoing a significant reset. New governance structures, such as ICVCM’s Core Carbon Principles and VCMI guidance, are redefining what high-integrity supply and use look like, shifting the market from growth-at-any-cost to credibility-driven expansion. Demand and supply patterns are changing accordingly, with early impacts visible across methodologies and project types.
Article 6 of the Paris Agreement, fully operational as of COP29, is positioned as the backbone of international market integration. While more than 80 countries are developing or considering Article 6 authorization and tracking frameworks, only a small number have both systems fully in place, signalling strong interest but slow progress toward implementation. Nevertheless, Article 6 remains the only instrument capable of linking national markets globally, making it central to the next decade of market expansion.
A profound shift highlighted throughout the report is the ascendancy of digital public infrastructure as the foundation of modern carbon markets. What once relied on manual verification and siloed registries is now moving toward satellite monitoring, AI-enabled MRV, interoperable registries, blockchain-based traceability, and real-time data sharing.
The Climate Action Data Trust (CAD Trust), Common Carbon Credit Data Model (CCCDM), and Carbon Data Open Protocol (CDOP) are aligning around a shared digital language for carbon data, a critical prerequisite for global scale and market integrity. Digital MRV systems, tokenised infrastructure, and automated settlement processes are reducing transaction costs, reducing risks, and opening participation to smaller market actors and emerging economies.
The lack of interconnected digital infrastructure has historically created bottlenecks, opacity, and inefficiency. Their contribution underscores how distributed ledgers can enable real-time integrity, end-to-end traceability, and machine-readable consistency across methodologies and asset types.
Technology is now the backbone of market integrity, market access, and global interoperability.
No longer siloed, traditional policy instruments and market mechanisms are beginning to merge. ETSs, voluntary crediting, Article 6 cooperation, CORSIA for aviation, and the Carbon Border Adjustment Mechanism (CBAM) are jointly shaping global investment and production patterns.
This convergence signals the emergence of a multi-pillar carbon market, with corporate, sovereign, and compliance demand reinforcing one another, rather than existing as parallel systems.
Perhaps one of the most transformative findings related to the net-zero trajectory is the shift in credit demand toward carbon removals, not just reductions. While reductions dominate today (roughly 90%), removals are expected to surpass reductions by 2040 and account for two-thirds of total demand by 2050.
This shift is driven by:
In short, the market is preparing for a world where removal credits form the backbone of net-zero compliance.
Carbon markets are no longer operating at the edges of the climate transition; they are becoming its organizing system. The shift toward interoperability, digitalisation, integrity, and removals marks the emergence of a more robust, scalable, and internationally coordinated market, one capable of supporting the net-zero transition at the required pace and scope.
💡 A clear narrative across the report is that companies will only gain value from low-carbon products if their emissions attributes can be trusted and compared. Fragmented methodologies and inconsistent accounting make carbon a weak product attribute today. Harmonisation driven by digital MRV, standardised data formats, and global frameworks will unlock product differentiation, access to compliant markets, and investment incentives for decarbonisation. Companies must prepare for a future where carbon transparency is as essential as financial disclosure and where interoperable data is a prerequisite for selling into regulated markets.
💡 As ETS systems, Article 6, corporate commitments, CORSIA, and CBAM begin to intersect, credit integrity is the new currency of trust. Standards bodies (ICVCM, VCMI), national governments, and digital registries are converging toward unified definitions of quality. With projections that the market could grow from $1.4B today to up to $250B by 2050, companies with access to high-integrity credits will have a competitive advantage in decarbonisation, compliance flexibility, and supply chain risk management. Organizations should treat high-integrity credits as a strategic portfolio asset, not a reputational tool.
💡 With removal credits expected to represent two-thirds of total market demand by 2050, companies need strategies that incorporate long-term removal procurement, technology monitoring, and engagement with emerging markets for engineered solutions. As global rules tighten, reductions alone will not be sufficient to meet science-based targets or regulatory expectations. Organizations should begin building exposure to emerging removal markets today as early movers will secure supply, pricing advantages, and compliance optionality.
