Carbon Credits 2026 Recap

Will the carbon pricing markets pass the Nietzsche Test?

On 10 September 2026, Future of Finance hosted Carbon Credits 2026: Will the Carbon Pricing Markets Pass the Nietzsche Test? at the Reed Smith offices in London, bringing together senior figures from across carbon markets, financial services, and the wider sustainability ecosystem to examine how carbon pricing markets can overcome persistent challenges around integrity, fragmentation, standardisation and liquidity. Discussions explored the collapse in carbon credit and EAC prices, growing regulatory and political pressures, and emerging developments including Article 6 credits, hourly EAC matching, CORSIA, securitisation and political risk insurance, with speakers considering how these developments could restore market confidence, attract institutional capital and finally deliver larger and more liquid carbon pricing markets.

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The Event in Numbers

4

Sessions

11

Speakers

70+

Registered
Delegates

60+

Represented
Companies

Key Takeaways

Keynote

1. More than half registrants polled on the panel's opening question identified loss of integrity in voluntary carbon credits, including double counting and greenwashing, as the most damaging factor to hit carbon pricing markets over the past three years (see Chart 1). A smaller but significant share of registrants pointed to the change of administration in the United States, its withdrawal from the Paris Agreement, its impact on carbon pricing markets in the US and general downgrading of the ESG obligations laid on American business. 2. A minority of respondents flagged certification agencies relying on discredited methodologies. One write-in comment emphasised that carbon pricing is fundamentally an economic mechanism rather than an environmental nice-to-have, arguing that the act of paying for emissions, not the underlying science, is what will ultimately discipline corporate behaviour. 3. The EU's Carbon Border Adjustment Mechanism (CBAM) has moved from a reporting obligation into full implementation this year, applying to six carbon intensive sectors: electricity, aluminium, cement, fertiliser, hydrogen, and iron and steel. Embedded carbon rules are now operationalising how imported emissions are measured and charged on products entering the EU. 4. The price of certificates purchased by importers of unrolled aluminium imported into the EU in the first quarter showed roughly €75 per tonne added for typical imports. This rose to €140 per tonne for Chinese-origin material and fell to €36 per tonne for Turkish material. This illustrates how the CBAM actively discriminates by verified emissions intensity. 5. Speakers agreed that, from a legal perspective, the cost of the CBAM is levied on the importer of record but it will ultimately be borne by end-consumers in the manner of a tariff. The fact this is consistent with the polluter-pays logic characteristic of all carbon compliance schemes does not alter that economic effect. One speaker argued this understates the real burden on consumers because the fall in free emissions allocations for domestic EU producers means they will experience two simultaneous cost shocks rather than one. 6. The CBAM has a positive spillover effect in encouraging exporting countries to price carbon emissions themselves. A Breugel Institute report found countries with heavy trade exposure to the EU are already developing domestic carbon pricing mechanisms of their own. This enables them to retain carbon-related revenue at home rather than pay it to EU tax collectors. Schemes are already advancing or under discussion in Turkey, Brazil and Mexico. 7. Offtake agreements - long-term bilateral contracts that commit buyers to purchase future volumes of carbon credits at a pre-agreed price - were seen as a structure that has grown in relevance as voluntary carbon markets have lost integrity, liquidity and pricing stability. This marks a shift in project-related carbon pricing away from public markets and into private, negotiated arrangements. 8. However, speakers noted the voluntary carbon credit market has contracted rather than disappeared since 2023. The high quality segment that remains has become more disciplined, since only projects with genuine underlying demand from either compliance obligations or credible net-zero commitments have continued to attract buyers. Prices of credits associated with high quality projects have risen as a result. 9. A parallel European regulation targeting methane emissions (the EU Methane Regulation) in imported oil, gas and coal was described as operating on a similar logic to the CBAM. This Regulation requires importers to report and eventually manage the methane intensity of hydrocarbons entering the EU, with non-compliance penalties reported at up to 20 percent of turnover. 10. Speakers distinguished methane certificates from carbon credits, noting that certification of methane content is currently decoupled from the physical cargo delivered. They also flagged unresolved regulatory questions over whether externally verified methane intensity schemes will be formally recognised under the EU's reporting framework. 11. Citing International Energy Agency (IAE) figures, one speaker noted that a majority of global oil and gas methane emissions, or around 74 percent, can reportedly be abated at US$10 per tonne or below. This is a far lower cost than engineered carbon capture solutions available in Europe, where costs range from €110-300 per tonne. 12. Convergence on the United Nations Framework Convention on Climate Change (UNFCCC) (i.e., the Paris Agreement) Article 6 guidance, supported since November 2025 by the two leading carbon project registry agencies in the voluntary carbon credit markets, has tilted the market towards sovereign rather than private risk. It marks a shift away from voluntary self-governance and self-regulation and towards a more legalistic, state-anchored framework. 13. Another development is the emergence of sector-specific standards such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Data measuring airline sector compliance with the scheme showed under one million tonnes cancelled against obligations compared with a provisional supply pool of around 170 million tonnes, with roughly 15 months remaining before the end of the scheme's first compliance phase. This suggests significant unresolved uncertainty over how much of the supply will ultimately be used. 14. Pricing within the compliance credit market was described as highly fragmented, ranging from roughly US$11 to more than US$20 per tonne for broadly comparable credits. This reflects buyer preference for regionally sourced projects, differing risk tolerances, and inconsistent reliance on third-party quality benchmarks rather than a single transparent price signal. 15. The CBAM does not currently capture Scope 2 emissions (those generated by suppliers of, say, electricity to manufacturers). This is an omission speakers described as a structural gap that leaves significant energy-intensive activity outside the scope of the mechanism. It means CBAM’s coverage of embedded carbon in traded goods remains partial. 16. Speakers suggested that corporate and government behaviour is shifting from treating carbon as a communications or reputational issue towards treating it as a hard input cost requiring verified supply-chain data. However, several cautioned that near-term geopolitical pressures could slow or postpone the progress of the transition without reversing its underlying direction. 17. Modelled trade impacts suggest exporters with lower verified emissions intensity, such as Canadian aluminium producers, could gain EU market share under CBAM, while higher-emissions producers, such as certain Indonesian steel exporters, could face materially reduced access. This indicates the mechanism will re-shape comparative trade advantage rather than remaining a theoretical future cost, and is already doing so. 18. A questioner asked whether carbon pricing exists primarily to drive a transition away from fossil fuels or to reward whoever prices carbon most effectively. Speakers acknowledged that carbon-linked mechanisms have historically helped subsidise renewables, while arguing that fossil fuel demand is expected to persist at significant volumes for decades.

From Carbon Credits to Carbon Costs: How Externalities Are Being Priced into Trade and Supply Chains

1. Corporate risk teams remain split on whether carbon pricing is a technical problem or a financial risk. Technical compliance reporting drew the most votes in audience polling, 16 of 53 respondents, narrowly ahead of the 15 who called it a major financial risk comparable with liquidity or interest-rate exposure and the 12 who called it primarily a reputational risk (see Chart 2). If those who think it is primarily a legal or reputational risk are added to those who think it is a technical reporting issue, more than half the audience were not yet convinced carbon is primarily a financial risk. 2. A live show of hands at the end of the discussion found no one in the room still willing to call carbon a purely technical issue. This suggests the discussion had effected a shift from the scepticism the same audience expressed in the pre-event poll. That shift is real evidence of a discussion changing minds in the room, though a live vote of this kind should be read as a snapshot of a continuing conversation rather than a durable market signal. 3. The 2004 United Nations report, Who Cares Wins, is often cited as the origin point for treating carbon externalities as material (though others trace carbon pricing back to the 1980s). Two decades on, the International Financial Reporting Standard S2 (IFRS S2) and the European Union (EU) 's Corporate Sustainability Reporting Directive (CSRD) have given that idea a considerably harder financial edge. Even after the CSRD's scope was narrowed, its core double-materiality requirement, assessing both a company's impact on climate and climate's impact on the company, survived intact. 4. The European Central Bank (ECB) fined a French agricultural lender roughly €4 million last year for failing to adequately address climate-related risk across its loan portfolio on the expected timeline. Yet the bank had already pledged not to finance oil and gas – sectors to which it was not exposed anyway - which meant it had limited fossil-fuel exposure to manage. Its actual vulnerability, and the ECB's real concern, was the climate resilience of the farmers in its loan book. 5. Carbon accounting is far from standardised in the corporate sector. An internal review at a major oil and gas company reportedly found more than 40 different methods of carbon accounting in use across its own business, depending on which internal team was asked. Estimation errors abound. Construction projects have been found to overestimate embodied emissions by 15 to 20 per cent on average, pointing to a data-governance problem rather than a data-collection one. 6. Between 80 and 90 per cent of an oil major's emissions footprint typically sits in Scope 3 – in other words, they occur across suppliers and customers rather than in its own direct operations. Banks face an analogous concentration of carbon emissions in the loans they make to companies. This exposure to carbon risk beyond the direct control of a company creates a genuine financial dilemma for a chief financial officer asked to price a liability that cannot currently be measured to within an order of magnitude, let alone a percentage point. 7. On Scope 3 emissions, there was disagreement over what counts as a legitimate carbon strategy when a company's biggest emissions source sits structurally outside its control. One view held companies should reduce emissions directly wherever physically possible and collaborate across value chains to remove double counting before reaching for unrelated offsets. A competing view argued this is unrealistic when the largest emissions source is often a national energy supplier or a State industrial policy. No individual company can compensate for these influences by its own supply-chain management. 8. However, there are steps companies can take on Scope 3 emissions. One consumer brand moved from estimating its entire coffee supply chain's footprint to identifying which specific growing regions faced the greatest emissions risk, then directing investment toward agroforestry projects in exactly those regions rather than buying generic credits. This shift from a broad, unfocused carbon reduction strategy to carefully aimed investments was cited as a template other companies could follow. 9. A second example of practical steps companies can take on Scope 3 emissions was offered. A bank financing a hydropower plant whose revenue depended on water supplied from tropical rainforests treated buying carbon credits to protect that specific forest as an instance of project risk management rather than pure philanthropy, since the plant's ability to stay in business depended directly on an ecosystem the bank did not own. Whether this counts as insetting (a company investing in carbon reduction in its own supply chain) or offsetting was debated, though one panellist argued the label matters less than the underlying logic. 10.An audience member working in construction materials described the benefits of companies actively seeking carbon credits that directly support recycling facilities supplying their own supply chain, such as aluminium and concrete recycling plants, rather than buying generic, unrelated credits. This suggests some buyers are already moving toward carbon credits chosen for their direct relevance to a company's own physical inputs. 11. There was no consensus on what should happen to the large stock of voluntary carbon credits issued some years ago using carbon reduction methodologies since shown to be imprecise. One view held that even flawed early voluntary carbon credit purchases by companies at least represented a genuine application of the principle that whoever creates a cost should pay for it, and that retroactively shaming early buyers punishes exactly the behaviour regulators are now trying to encourage. 12. Roughly 1.8 billion tonnes of voluntary carbon credits invested in forestry have been issued under methodologies now regraded as unsound. They reflected a preference for perception rather than effectiveness, and have lumbered the carbon pricing markets with a large legacy of unretired credits that overshadows the small number of credits that have been retired. This over-supply of unwanted, low-quality credits now sits alongside scarce high-quality removal credits that command excessively high prices. This was described as a structural feature of the market, not a temporary imbalance likely to self-correct quickly. 13. One view is that the high prices are more apparent than real. A technology company, for example, has been retiring voluntary carbon removal credits at prices reported to be as high as US$500 a tonne. One theory offered was that spreading that cost across an enormous Cloud and artificial intelligence (AI) customer base makes the per-unit cost invisible, turning what looks like a premium climate commitment into a straightforwardly profitable line item rather than a pure cost. 14. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) launched by the International Civil Aviation Organisation (ICAO) is not yet established as a model standard for carbon pricing. Physically decarbonising aviation fuel was cited at costs approaching US$1,500 a tonne, against compliance credits available at roughly US$15 a tonne. Airlines were described as still finding reasons not to pay even that lower figure, suggesting the pricing structure has not yet been made painful enough to change behaviour. 15. Data quality remains a genuine constraint on carbon pricing, panellists agreed. However, they disagreed on whether that constraint justifies waiting for better data before acting. One argued that approximate carbon data is already sufficient to direct real capital toward specific, quantifiable risks such as water security and supply-chain resilience, without waiting for a perfect set of global carbon numbers that may never arrive. 16. The panel's overall trajectory, despite starting from audience scepticism that carbon pricing had genuinely become a financial issue, ended without a single voice defending the purely technical framing embedded in the opening poll question. Whether that convergence reflects a durable shift in how companies actually manage carbon risk, or is simply the persuasive effect of a convincing discussion heard by an engaged audience, remains an open question.

From Footprints to Financials: Scope 3, Financed Emissions and the CFO's Carbon Problem

1. There will be a decisive shift from voluntary to compliance markets. That is what the poll of people attending the 2026 Future of Finance Carbon Credits event on 10 September indicated (see Chart 3). This proposition scored more votes than those who backed better market infrastructure and a better example being set by sectoral schemes such as CORSIA and the International Maritime Organisation's (IMO) net-zero framework combined. Notably, neither tokenisation - as an alternative issuance and trading infrastructure – nor the elimination of the carbon credit market's unretired voluntary credit overhang attracted any votes at all. 2. In theory, the carbon pricing market could be at least half as big as the oil market – say, US$1-1.5 trillion a year - yet its market value is maybe 2 per cent of the value of oil. Carbon prices have also been volatile, indicating illiquidity. The carbon market is also fragmented. The latest World Bank report on carbon markets counted 121 separate carbon pricing instruments, consisting of 47 carbon taxes, 40 emissions trading schemes and 34 carbon credit markets, spread across 87 jurisdictions. Yet 70 per cent of global emissions currently sit outside any carbon pricing mechanism at all. So, while the carbon market demonstrably has ample room for growth, it is hard to argue against the proposition that carbon pricing is also suffering from a serious market failure. 3. Panellists argued growth is structurally difficult to capture, since expanding coverage requires new national or sectoral schemes rather than scaling any single existing instrument. Securitisation rather than continued pursuit of commodity-style trading might offer a faster path to scale. On this view, carbon credits can be wrapped into regulated securities using established legal frameworks, including US Rule 144A private placement frameworks and exemptions from US domestic registration requirements under Regulation S. These carbon securities can be tracked with standard identifiers such as CUSIPs and ISINs and held at central securities depositories (CSDs) like any other tradeable financial instrument. It would enable carbon markets to build on decades of trust and standardisation in the securities markets. 4. A member of the audience asked whether carbon reduction projects could survive being bundled into securitised, tranche-like structures, explicitly invoking the loss of transparency seen in pre-financial-crisis structured credit products such as CDOs and CDO Squares. Such an outcome cannot be ruled out. The non-fungibility of carbon projects means any securitised carbon product is only as reliable as the diligence performed on the projects it encompasses. However, securities markets face the same issue of non-fungibility and securitisation done properly, does transfer due diligence responsibility for securitised projects to a named, accountable issuer rather than diffusing it between issuers, registries, trading platforms and others, as in the carbon pricing markets today. This provides a measure of protection against the risk that securitised carbon instruments degenerate into the equivalent of the structured credit markets of the pre-crisis period. 5. A competing view accepted that securitisation might be useful as way of repackaging carbon risks, but insisted the underlying asset is hard to accommodate within a securities market structure because a tonne of carbon in one project is hard to compare easily with a tonne of carbon from another project, unlike a barrel of oil (though crude oil is not fungible or even interchangeable either). Both camps agreed that a single global carbon price will never emerge, given how many national and sectoral factors are bound to frustrate any attempt to converge prices across jurisdictions. 6. Standardisation is also proving elusive in carbon pricing markets. One firm's four-year effort to build a shared glossary of carbon-market terms in conjunction with outside legal counsel produced a document running to roughly 4,000 words. This was cited as concrete evidence of how much basic definitional work the market has yet to complete, well before any conversation about how to achieve convergence on a single price can even begin. 7. The reluctance to embrace tokenisation as an effective alternative market infrastructure for carbon, evident in the poll, did not surprise panellists. The stated objection was complexity. In a market where buyers are already struggling to understand their own emissions footprint, and which carbon credit best meets their needs, adding blockchain terminology was more likely to overwhelm buyers than build their trust. 8. However, one carbon market platform does uses blockchain technology, albeit as an internal tracking and audit mechanism, whose functionality is similar to a securities identifier. The blockchain component is used to support a transfer-agency process rather than marketed to buyers as a useful feature. Panellists agreed that the distinction between tokenisation as invisible plumbing and tokenisation as a sales pitch is the difference between a technology simply working and adding friction to an already difficult process of persuasion. 9. An audience member argued that attempts to tokenise carbon credits had failed partly because they tried to move carbon credits already in issue on to a blockchain platform. Blockchain innovators might have had more success had they built the technology into carbon pricing from the outset of a project rather than trying to shoehorn it into an existing market infrastructure at the trading level. This failure had distorted market perceptions of what blockchain technology can usefully do. Retrofitting the transparency enhancing capability of blockchain onto the last step of a transaction was described as a much weaker use case than embedding it into a project's data from the point credits are first issued. 10. Panellists noted that Article 6.0 purchases and sales (under Article 6.2 of the Paris Agreement sovereign states can exchange Internationally Transferred Mitigation Outcomes (ITMOs) and under Article 6.4 companies can buy credits from high integrity projects), were attracting less buyer interest than their high political and policy attention suggested they might. However, bi-lateral agreements between countries under Article 6.0 are being signed already, led by Singapore (32 signed) and Switzerland (19 signed), and with many emerging market countries keen to participate because Article 6.0 projects are a source of capital. Singapore, with a current carbon price of S$25 and a stated 2030 target price of S$80, was cited as an exemplar, giving Article 6.0 credits both a spot reference and an implied forward curve that voluntary carbon credit instruments lack. 11. Vietnam's position illustrates why national self-interest is more likely to drive growth in the Article 6.0 carbon pricing markets than global standard-setting. Vietnam controls the world's second-largest reserves of rare-earth minerals demanded by industry. This gives Vietnam bargaining power with European and North American states over how it responds to cross-border carbon measures such as the EU’s Carbon Border Adjustment Mechanism (CBAM), instead of simply absorbing their cost. It is a reminder that the EU’s CBAM is a form of economic pressure exerted through climate policy, which is bound to provoke counter-reactions. 12.With neither government-to-government carbon trading, nor voluntary trading markets, currently functioning like securities or money markets - trading lacks standardisation, regulation and market infrastructure – innovation is necessary to attract interest. One panellist reported that redeploying the financial assets that back Stablecoins into carbon projects created opportunities to deliver higher yielding products that blend returns from financial and carbon assets. Returns in low double digits monthly were being achieved. This was high relative to conventional yields, indicating that carbon exposure can be sold as a yield-enhancing ingredient rather than a standalone carbon reduction purchase. 13. In theory, carbon credit ratings - independent opinions on how likely a project is to deliver on its promises of carbon reduction - can also increase market activity. However, carbon credit ratings are dissimilar from debt market ratings. Most carbon projects behave like equity rather than debt, lacking the predictable cash flows traditional agencies such as Moody's and S&P require to rate an instrument at all. This distinction is one the carbon pricing market has not yet addressed honestly. 14. One idea to increase activity is a mandatory carbon-asset ownership requirement. This would force every emitting business to hold a carbon asset or cease operating. Panellists thought it is impractical, judging it politically difficult to implement globally. They reckoned making carbon exposure economically self-sustaining through yield or margin was a better approach than coercion (or relying on goodwill). 15. Panellists broadly agreed that carbon credits will scale only when they stop asking buyers to be believers and start behaving like ordinary financial instruments, priced, rated and settled the same way as anything else on a corporate balance sheet.

What Can Be Done to Deliver Large and Liquid Markets in Carbon Credits?

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