Carbon credit demand soars as stricter climate rules reshape corporate strategies

The voluntary carbon market (VCM) is set for major shifts as demand for carbon credits rises. A new report by AlliedOffsets forecasts that companies will need around 281 million credits annually, driven by stricter climate rules and corporate net-zero pledges. The analysis also highlights which sectors and regions will shape future demand.

The study uses a predictive model to identify likely buyers, while supply constraints in key areas could push firms toward newer removal technologies.

The VCM has expanded rapidly over the past five years, now tracking over 36,000 projects and 28,000 buyers. In 2025, retirements of carbon credits dropped to about 168 million tonnes, while new issuances fell to roughly 270 million tonnes. Despite lower volumes, spending climbed to $1.04 billion, reflecting a shift toward higher-quality credits.

AlliedOffsets' Likelihood to Buy (LtB) model points to aviation, energy, and technology firms as the most probable new or returning buyers. Airlines face growing pressure from the ICAO CORSIA scheme, which will require mandatory emissions offsetting for most international flights from 2027. The rule applies to routes between ICAO member states, though exemptions exist for less developed and small island nations.

Companies now prioritise credits with robust monitoring and measurable climate benefits. Nature-based projects and forward contracts are gaining traction, while traditional forestry and land-use schemes may struggle to meet demand. Engineered removals and industrial projects are expected to fill the gap as buyers seek reliable, scalable solutions.

Factors influencing a company's decision to purchase credits include its sector, profit levels, carbon pricing policies, and net-zero targets. Headquarters location also plays a role, with the U.S., China, UK, France, Germany, and Brazil leading demand. AlliedOffsets estimates these buyers will spend about $2.27 billion per year, with aviation and energy sectors driving much of the activity.

The technology, telecommunications, and energy industries have dominated the market so far. But as regulations tighten and corporate sustainability goals evolve, the buyer base is likely to widen further.

The VCM is entering a phase of higher spending and stricter quality standards. With demand projected to outpace supply in some areas, companies may turn to alternative removal methods. The shift reflects broader trends in corporate climate action, where transparency and measurable impact are becoming non-negotiable.

Aviation and energy firms will remain key players, particularly as ICAO's offsetting rules take full effect. The market's growth will depend on balancing supply constraints with the need for credible, high-integrity credits.