Global Carbon Market Trends.

The global carbon market has experienced a profound shift during the first half of 2026, balancing demand milestones with a tightening supply landscape and rigorous new quality standards. A comprehensive mid-year review from Allied Offsets, Carbon Market Trends Report: Key Trends in H1 2026, reveals a market that is maturing beyond its historic “race to the bottom” dynamics and transitioning into a structural pillar of corporate environmental strategy.

Retirements & buyer trends.

The first five months of 2026 delivered the strongest start to a year ever recorded for voluntary carbon market (VCM) credit retirements. Total retirement volumes for the first half of the year reached 104 million tonnes of CO2e (tCO2e), marking a 4% increase over H1 2025 levels and establishing a post-2023 high.

This record-breaking momentum was significantly boosted in May when Hess Corporation retired 12.5 million Guyana JREDD credits, positioning the energy giant as the top overall carbon credit buyer for the period. 

More broadly, the buy-side landscape highlights several notable trends:

Sector dominance: Energy corporations, including Hess, Eni, and Woodside Energy Group, continue to lead global retirement activity.

The Microsoft effect: Microsoft secured its place as the second-largest buyer, though its public announcement to slow down new procurement dampened broader market sentiment, leaving some project developers struggling to raise capital. Despite the cooling narrative, Microsoft has not exited the market, executing two major offtake transactions following the reported slowdown.

Emergence of Asian demands: Asia is pacing global regional growth in new market entrants, supported by the launch of the Action for a Resilient Climate (ARC) Coalition in Singapore in May 2026. Backed by corporate giants Tencent, Mitsubishi Corporation, and GenZero, the coalition aims to procure at least 10 million tonnes of carbon credits by 2030.

Corporate standard shocks: The Science Based Targets initiative (SBTi) released its Corporate Net Zero Standard V2.0 in early June 2026. While it mandates carbon removal for residual emissions starting in 2035, it permits the voluntary use of avoidance credits along the transition pathway until then. Because SBTi-committed firms’ historical purchase removals at higher rates, this temporary flexibility may inadvertently pivot near-term interest back toward avoidance strategies.

Offtakes.

While immediate credit retirements flourished, the forward agreement market experienced a visible period of consolidation following a blockbuster year. Offtake deals dropped to just under 14 million tonnes contracted in H1 2026, a decline from the record-setting 63 million tonnes secured across 2025.

This retreat was heavily felt in the Carbon Dioxide Removal (CDR) arena. Global CDR offtakes reached 29.7 million tonnes in 2025, but have tracked at a modest 4.5 million tonnes in the first half of 2026. A key driver of this contraction was Microsoft sharply scaling back its forward commitments from 11.8 million tonnes in H2 2025 to 2.4 million tonnes in H1 2026.

Conversely, non-Microsoft CDR demand reached an all-time high of 2.1 million tonnes in H1 2026, demonstrating a gradual, healthy broadening of the market’s buyer base. The number of active repeat CDR buyers reached 175 in the first half of this year. While overall volumes fell, professional services more than doubled their contracted volumes to 834,000 tonnes, and the public sector emerged as a fresh demand catalyst, led by a substantial purchase from the City of Stockholm.

Issuances.

On the supply side of the equation, primary credit issuances faced a dramatic correction. Total H1 2026 issuance volumes fell by over 44% year-on-year, dropping to 108.2 million tCO2e compared to the 156.2 million tCO2e observed during the same period in 2025.

Despite fewer total credits entering the market, data points to an encouraging structural pivot toward environmental integrity and higher quality standards:

• Issuances of Core Carbon Principle (CCP) approved credits surged by 64% year-on-year to 16 million tonnes. Concurrently, issuances of rejected credits plummeted by 67% to 10.5 million tonnes, verifying an intentional cleaning of register supply.
• Since 2022, cumulative CDR offtakes have reached approximately 48.5 million tonnes against a meager 2.65 million tonnes in actual issuances, an 18x delivery deficit illustrating that the removal space remains overwhelmingly forward-looking.
• Biochar stands alone as the only technical CDR pathway delivering across the full transaction cycle, claiming 57% of all-time CDR issuances (1.58 million tonnes) and 53% of all-time CDR retirements.
• Direct Air Capture (DAC) faces a staggering 99.9% delivery gap, with just 0.1% of its 2.06 million contracted tonnes successfully issued to date. Meanwhile, Enhanced Rock Weathering (ERW) is capturing steady ground, with 11,500 credits issued in 2026 already tracking to surpass its full-year 2025 total.

Pricing.

The financial dynamics of 2026 reflect a flattening price distribution curve, signaling that buyers are increasingly comfortable paying premiums for verified high-integrity supply.

Geopolitical vulnerabilities and sovereign policy friction have forced rapid localized price compressions. The prominent insolvency and collapse of cookstove distributor KOKO Networks on January 30, 2026, triggered after failing to secure an Article 6.2 Letter of Authorization (LoA) from the Kenyan government, sent shockwaves through localized pricing structures. Kenya’s weighted average credit price plummeted 45% instantly, crashing from $7.36 in January to $3.93 in February, and remaining depressed at $3.71 through April.

In the compliance space, insurance mechanisms have successfully driven price convergence between projects carrying strict host-government LoAs and credits eligible via Corresponding Adjustments (CAs). However, this stabilization is threatened by a draft European Commission Concept Note issued in April 2026. The proposal seeks to enforce strict new baseline restrictions for EU-based airlines under CORSIA Phase 1. If codified, the rules would disqualify roughly 84% (31.9 million tonnes) of current CORSIA-eligible supply, creating an acute, highly bifurcated two-tiered price market.

Invert Insights.

💡 The report shows that carbon markets are reaching a new level of maturation. The 64% spike in CCP-approved issuances alongside a 67% plunge in rejected credits demonstrates that cheap, unverified tonnes are no longer the norm. Buyers are willing to pay a premium for integrity.

💡 The immediate price collapse in Kenya following KOKO Networks’ insolvency proves that carbon projects can no longer exist in a vacuum apart from host-government alignment. Regulatory clarity, or lack thereof, is now a primary lever of financial risk.

💡 For years, the market suffered from single-buyer dependency risk, predominantly with Microsoft. The surge in non-Microsoft CDR demand to an all-time high, paired with Asia’s corporate-led ARC Coalition, proves that the buyer ecosystem is diversifying. This reduces systemic reliance on a few tech giants and builds a healthier macro demand floor.

💡 Due to the newly released SBTi Corporate Net Zero Standard V2.0 allowing the voluntary use of avoidance credits along transition pathways until 2035, look for a tactical resurgence in high-quality avoidance and nature-based reduction credits for the remainder of 2026. Companies looking to manage near-term cost exposure while remaining aligned with corporate standards will likely capitalize on this window before switching heavily to removals closer to the next decade. Looking to secure high-integrity, nature-based removal credits? We can help!