Carbon credit prices explained: what determines the value of a carbon credit?

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on CarbonCredits.com or enjoy below:

🗞️ Driving the news: Carbon credit prices can range from below $1 to more than $1,000 per tCO₂e, reflecting wide differences in project type, quality, permanence and market demand

🔭 The context: In 2025, the MSCI Global Carbon Credit Price Index averaged $3.50/tCO₂e, while credits rated BBB or above averaged $6.80/tCO₂e
• Project type is a major determinant of price, with conventional avoidance credits often trading at lower levels than durable carbon removals such as biochar or direct air capture
• Location, vintage, verification quality, additionality and the risk of leakage or double counting can all influence what buyers are willing to pay

🌍 Why it matters: Growing price differentiation suggests buyers are increasingly distinguishing between carbon credits based on environmental integrity rather than treating them as interchangeable commodities
• Higher prices do not automatically indicate better climate outcomes, making independent verification, permanence and measurement critical when assessing value

⏭️ What’s next: As voluntary and compliance carbon markets mature, pricing is likely to become increasingly linked to credit quality, durability and transparency, while buyers continue shifting toward higher-integrity projects and removals

📈 One stat: In 2025, average voluntary carbon credit prices were around $3.50/tCO₂e, compared with $6.80/tCO₂e for credits rated BBB or above

Subscribe to our free newsletters to never miss a beat in sustainability.

The world needs sustainability knowledge. At illuminem, no interest group or shareholder can influence our work. Thank you for supporting our mission to make high-quality and independent sustainability information free for all. Every contribution helps. Thank you for donating today.