The carbon market grew in value and shrank in volume through the first half of 2026, as buyers concentrated spending on higher-quality credits. Retirement value reached $247 million in the second quarter (Q2 2026), up from $227 million a year earlier, and the average price paid per credit rose to $6.41, from $5.29. Volumes fell over the same period, with 38.55 million credits retired in the quarter and 89.27 million across the first half of the year (H1 2026), down 10% and 9% year on year. The market is repricing around quality.
Investment-grade credits, rated BBB or higher, took 27% of rated retirement volume and 51% of rated value in Q2 2026. Part of the volume decline traces to a single buyer, as Shell cut its retirements from 6.7 million tonnes to 494,100 tonnes, around two-thirds of the year-on-year drop. The quality premium is widening within project types. BBB+ ARR (afforestation, reforestation and revegetation) credits averaged $28.55 in H1 2026 against $9.12 for lower-rated ARR, more than three times the price.
The IFM (improved forest management) spread widened from $1.32 to $5.59 year on year, and BBB+ REDD+ (reducing emissions from deforestation and forest degradation) prices rose 71% to $8.40 as lower-rated credits fell 26% to $1.82. New supply reflects the shift, with investment-grade issuances reaching 29% in H1 2026, from around 13–16% between 2022 and 2024, and CCP (Core Carbon Principles) accreditation covering 27.5% of Q2 issuances.
The forward offtake market, where large buyers procure credits ahead of delivery, contracted sharply. Disclosed offtake volumes fell 65% year on year to 21.52 million tonnes in H1 2026, and value dropped 70% to $2.25 billion.
Microsoft accounts for most of the move, with its announced volumes down 82% to 9.52 million tonnes after a broader pullback. Demand outside Microsoft grew 73% to 12 million tonnes, led by Woodside at 6 million tonnes. Biochar was the standout, with offtake volume up 79% to 3.17 million tonnes and value up 80% to $806 million, now around 36% of offtake value.
Two frameworks are reshaping the demand outlook. The SBTi (Science Based Targets initiative) Corporate Net-Zero Standard V2 recognises carbon credits for the first time. SBTi-aligned companies, covering an estimated 34.5 billion tonnes of carbon dioxide equivalent (tCO2e), retired credits equal to just 0.06% of their footprint last year, against a 1% Engaged-status threshold, and Sylvera models demand rising to between 55 million and 224 million tonnes by 2030 depending on alignment.
In aviation, airlines retired 502,000 CORSIA credits in H1 2026, and of roughly 300 million potentially eligible credits, 38 million currently meet the requirements to serve compliance demand estimated at 163 million units before the January 2028 deadline. Sylvera forecasts eligible-unit prices between $15 and $53 as that deadline approaches, with a median outcome of $33.
The through-line is a market smaller in volume and larger in value, with quality ratings, corporate standards and compliance schemes increasingly determining where demand settles.