Record-Breaking Carbon Credit Retirements Signal Market Shift Toward Quality and Compliance

The voluntary carbon market reached a major milestone in the first half of 2025, with 95 million carbon credits retired—more than any half-year period on record. This uptick highlights not only the growing appetite for carbon offsets but also a notable shift toward higher quality and regulatory-ready credits.

Forest workers planting saplings in a forest as part of a reforestation effort. AI generated picture. 

According to new figures from carbon intelligence platform Sylvera, this wave of retirements marks a high point in the lifecycle of carbon credits—where a credit is permanently used to balance out emissions. On the supply side, the market is also expanding rapidly. In Q2 alone, 77 million new credits entered circulation, a 39% increase from the previous quarter and a 14% rise compared to the same period last year.

Of the credits retired and rated by Sylvera in H1 2025, 57% earned a BB grade or higher, up from 52% in 2024. This rising bar for quality is driven by stronger market due diligence and initiatives like the Core Carbon Principles developed by the Integrity Council for the Voluntary Carbon Market (ICVCM).

Retirements hit a record high with 95 million credits retired in H1 2025.

“Demand for credits and, in particular, high-quality credits is at an all-time high,” said Allister Furey, CEO at Sylvera. “Market alignment with both integrity and regulatory expectations is starting to unlock the potential of carbon markets to deliver genuine climate impact at lower economic costs.”

One key factor behind the surge is the influence of international aviation’s offsetting framework, CORSIA. Over a third (37%) of newly issued credits in Q2 may qualify under Phase 1 of the scheme—an increase from 28% a year ago. Final eligibility depends on host country authorisation under Article 6 of the Paris Agreement, but the direction of travel is clear: compliance-grade credits are on the rise.

Continued move towards higher quality, 57% of rated credits retired BB or higher.

While nature-based solutions like Afforestation, Reforestation, and Revegetation (ARR) projects continue to lead in volume, industrial and commercial efforts are gaining steam. These now represent 19% of issuances, more than double last year’s share. REDD+ projects have also seen a resurgence, accounting for 16% of Q2 credits.

Geographically, North America emerged as a key hub for issuance, producing 43% of all new credits in Q2. For the first time, the American Carbon Registry surpassed both Gold Standard and Verra in terms of quarterly issuances.

With new methodologies and standards taking shape ahead of COP29, and initiatives like PACM preparing to enter the market, the voluntary carbon market is evolving fast. The convergence of supply growth, quality enhancement, and regulatory readiness signals a new chapter—one where integrity, scalability, and climate impact are more closely aligned than ever.