Insights
Carbon markets

Carbon markets are expanding rapidly as countries and companies pursue net zero goals.

Over 95 countries have pledged net zero targets according to the IEA, and carbon pricing tools – such as taxes and emissions trading systems – are seen as essential to accelerate emissions reductions and fund climate action. The number of mandatory carbon pricing schemes has increased from just one in 2005 to 80 in 2025¹, generating US $102 billion in revenue in 2024².

Mandatory carbon markets are evolving in scope and complexity:

• New instruments such as the EU’s Carbon Border Adjustment Mechanism (CBAM) are emerging.
• Existing systems in the UK and EU are expanding to cover more sectors, including aviation, shipping and waste.

At the same time, companies must navigate both regulatory compliance and their own climate targets. Voluntary carbon markets (VCMs) offer a means for companies to meet these climate targets.³

While interest in VCMs has declined since 2022, the rate of decline is slowing. The total reported transaction value of the VCM in 2024 was US $535 million, down 29% from 2023. Carbon market participants anticipate a positive impact on demand and supply in the VCM from Article 6 of the Paris Agreement, although they believe local jurisdictions may not yet be ready to engage with and implement Article 6 mechanisms.⁴  

Despite their potential, both mandatory and voluntary carbon markets face criticism over inconsistent standards and low carbon prices. Creating globally aligned, effective systems remains a challenge.

To support businesses, we share our views on the legal, commercial and strategic dimensions of carbon markets in this fast-changing space.

Sources:

1. State and trends of carbon pricing, section 2.1 (link)

2. State and trends of carbon pricing, section 2.3 (link)

3. Voluntary carbon markets key to global net-zero ambitions, says ICC (link)

4. State of the Voluntary Carbon Market 2025, key findings (link)