Our Take: IMPACT Q2 2025 UPDATES - Gordian Knot Strategies

As we pass the halfway point of 2025, carbon markets are deep into a transition that confirms many of our early-year forecasts. Across the IMPACT pillars – Integrity, Momentum, Prices, Achievement, Collaboration, and Targets – Q2 delivered meaningful developments and clear signals for what lies ahead in Q3, particularly as the world prepares for COP30 in Brazil.

I = INTEGRITY

Integrity remains the backbone of carbon market evolution. The Integrity Council for the Voluntary Carbon Market (ICVCM) advanced its efforts to operationalize the Core Carbon Principles (CCPs), with market participants increasingly retiring legacy methodologies and turning to credits that align with updated standards.[1]

Although implementation is gradual, the shift is unmistakable – buyers are prioritizing credits rated by trusted agencies and are willing to pay premiums for high-integrity credits with verified co-benefits. This aligns with insights from Ecosystem Marketplace and Sylvera, which highlight the growing correlation between price and quality.[2][3]

Meanwhile, corporate actors continue to grapple with uncertainty around the Science Based Targets initiative (SBTi) as it delays guidance on the role of offsets in meeting Scope 3 emissions targets – a delay that’s keeping buyers cautious and markets unsettled.[4]

Finally, integrity enforcement is tightening. A report from the London School of Economics revealed a global spike in legal challenges targeting companies for overstated or misleading emissions claims, underlining the mounting pressure for transparency and accountability in the voluntary carbon market.[5]

M = MOMENTUM

Momentum in global carbon markets continued to build in Q2, especially through tighter integration between compliance and voluntary mechanisms. Last year, retirements of carbon credits outpaced issuances, suggesting that demand remains strong and the market is tightening.[6]

Regulatory developments also picked up pace. The IMO’s new global maritime carbon tax, approved in 2025, sets a levy starting at $100 per tonne of CO2 for large vessels beginning in 2028, with rates rising based on emissions intensity.[7] While critics say the plan lacks ambition, it marks a significant first step toward decarbonizing international shipping. Simultaneously, the world’s largest GHG emitter, China, expanded its national ETS to include the aluminum and chemical sectors.[8] In Latin America, as Brazil steps into its leadership role ahead of COP30, it is preparing to anchor the international conversation around Article 6 implementation and nature-based solutions.[9]

P = PRICES

Q2 revealed a maturing market with growing price stratification. High-integrity and removal-based credits, particularly those aligned with ICVCM’s CCPs, are trading at substantial premiums, with some fetching up to 80% more than generic avoidance credits.[10] Despite a 25% drop in overall transaction volumes, average prices dipped only slightly (about 5.5%), illustrating the growing resilience of demand for high-quality supply.[11] Specific segments saw sharp gains – CCP-approved landfill gas credits surged by ~35% in price, reflecting investor confidence in high-integrity labels.

In regulated markets, China’s allowance prices reached record highs due to new sector inclusion, while Australia’s ACCU market also set new records in price and volume amid tightening baselines.[12] Meanwhile, EU Allowances (EUAs) dipped ~2.5% mid-June, a rare divergence from gas prices, hinting at market saturation and external geopolitical forces.[13]

A = ACHIEVEMENT

The second quarter marked key achievements on multiple fronts.

Project developers embraced what many are calling a “supply-side reboot” – retiring older credits while scaling up projects that meet the latest integrity criteria.

The European Union finalized plans for its €100 billion Industrial Decarbonisation Bank, which will begin issuing carbon contracts-for-difference (CfDs) next quarter to support deep industrial decarbonization.[14] At the same time, the “Global Landscape of Climate Finance 2025” report confirmed that global climate finance topped $2 trillion in 2024, with private capital now accounting for more than half of all flows.[15]

On the regulatory front, Article 6.2 saw fresh bilateral deals involving Switzerland, Rwanda, and Ghana, while California and South Korea advanced reforms to better align with international frameworks. With COP30 on the horizon, many expect Q3 to usher in the first live trades under Article 6.4 – a milestone in global carbon market alignment.

C = COLLABORATION

Even with the disappearance of federal leadership from the United States, international collaboration is advancing on multiple fronts. The EU, China, and Brazil have stepped up, setting the tone for multilateral market governance. Brazil, in particular, is leaning into its COP30 host role, championing forest finance, South-South trade, and Article 6 diplomacy.

Cross-border cooperation also grew stronger. Article 6.2 bilateral deals are scaling, and jurisdictions are harmonizing ETS frameworks to enable future linkages.[16]

The UN Ocean Conference brought further good news – over €3 billion in ocean conservation finance was pledged, alongside $2.5 billion earmarked for Latin American marine protection.[17] This is an example of how climate and biodiversity finance are increasingly converging.

T = TARGETS

Corporate climate targets remain in a state of uncertainty. The SBTi’s continued deferral on Scope 3 offset rules has created a vacuum of clarity, reinforcing the rise of “greenhushing” – where companies choose silence over scrutiny when it comes to their climate goals. [18] Nevertheless, movement is occurring beneath the surface. Demand continues to tilt toward carbon removals, and companies are increasingly requiring third-party verification for the credits they use.

Brazil’s proposed Tropical Forest Forever Facility (TFFF), designed to blend public and private finance in support of forest protection, is shaping up to be a centerpiece of COP30.[19] In parallel, regulatory changes like the EU’s Corporate Sustainability Reporting Directive (CSRD) are pressuring firms to increase transparency and adopt more credible credit strategies.[20]

Q3 2025 Outlook

Looking ahead, we anticipate that integrity-focused frameworks like ICVCM’s CCPs and SBTi’s forthcoming guidance will further shape buyer behavior. Retirement rates should continue to outpace issuances, tightening supply and increasing demand for high-quality credits. Price stratification will deepen, particularly in regulated markets where compliance thresholds are rising.

On the global stage, Brazil’s COP30 diplomacy will intensify, aiming to realign climate finance around equity and nature. At the same time, corporations will continue quietly transitioning toward removals and premium credits, opting for substance over publicity until reputational risks subside.

In sum, Q2 confirmed what many suspected at the start of the year – carbon markets are maturing, and success will favor those who invest in integrity, innovation, and collaboration.

Do you agree? Disagree? We would love to hear your thoughts!

[1] https://icvcm.org/assessment-status/

[2] https://www.ecosystemmarketplace.com/articles/sovcm-2025-finds-the-voluntary-carbon-market-in-transition-demand-holding-steady-as-turnover-stabilizes/

[3] https://www.sylvera.com/blog/carbon-markets-5-key-takeaways-for-2025-strategies

[4] https://carboncredits.com/carbon-markets-in-2025-a-new-era-of-accountability-quality-and-transparency/

[5] https://www.theguardian.com/environment/2025/jun/25/courts-corporate-carbon-offsetting-claims-lse-report

[6] https://www.ecosystemmarketplace.com/articles/sovcm-2025-finds-the-voluntary-carbon-market-in-transition-demand-holding-steady-as-turnover-stabilizes/

[7] https://gordianknotstrategies.com/2025/04/14/sliced-pricing-the-carbon-of-marine-shipping/

[8] https://www.reccessary.com/en/research/global-carbon-market-highlights-2025

[9] https://www.carbonknowledgehub.com/factsheets/things-to-watch-in-global-carbon-markets-in-2025

[10] https://www.sylvera.com/blog/carbon-markets-5-key-takeaways-for-2025-strategies

[11] https://www.ecosystemmarketplace.com/articles/sovcm-2025-finds-the-voluntary-carbon-market-in-transition-demand-holding-steady-as-turnover-stabilizes/