2025 AlliedOffsets Review Notes VCM Growth in a Concentrated Manner: A Year of Resilience and Cautious Optimism
The 2025 AlliedOffsets review of the voluntary carbon market (VCM) reveals a notable expansion, with a concentrated growth pattern. The firm analyzed data from over 36,000 projects across 35+ registries, 28,000+ corporates, and billions of tons of issuances and retirements, highlighting key VCM developments in 2025.
After two years of contraction, the VCM rebounded in 2025, surpassing 2024 levels with carbon retirements, record-high offtakes, and a total market value exceeding $10 billion. This upward trend was accompanied by a structural shift favoring carbon removals, but demand remained concentrated among a select group of buyers, countries, and project types, despite improved policy support and standards.
Retirements and offsets increased by approximately 100 million tons compared to 2024, yet the number of unique buyers remained stable, indicating a trend of increasing volumes by a limited group of buyers. New buyers from Asia and parts of Europe emerged, suggesting potential geographic diversification of demand in 2026.
Issuance volumes reached an all-time high, primarily from biochar, utilization, bio-other, and BECCS deals, emphasizing the continued dominance of biomass-based removals. Carbon removal offtake deals surged by 305% between 2024 and 2025, with Microsoft leading the market. Despite higher transaction volumes, overall CDR investment slowed in 2025.
The US maintained its lead in CDR purchasing and project supply, followed by mature markets like the UK, the Netherlands, and Canada. 2025 witnessed strengthened policy and integrity support, with 50% of compliance and regulatory schemes accepting or considering offsets. However, limitations persist, such as constrained CORSIA Phase 1 supply due to limited credit availability.
In a retrospective comment, Anton Root, Head of Research at AlliedOffsets, expressed cautious optimism, stating, "2025 marked a year of resilience for the VCM. After restructuring, retooling, and learning from past mistakes, companies are heading into the new year with a sense of cautious optimism that the worst may finally be behind them."
For more insights, read the Sylvera Report on carbon credit retirements and market prioritization of quality. Subscribe to AlliedOffsets' weekly newsletter for the latest news on the carbon industry.
