Climate Change Center

 

 

Jina Kang(Global Development Cooperation Team Manager)

 

 

The Rules of the Carbon Market Are Changing
In 2025, the carbon market is no longer evaluated by “how many tons were reduced.” 

 

Competitiveness once depended solely on volume—but today, the questions have shifted:

“What value did those reductions create for local communities?”
“What lasting changes did those credits deliver for people and nature?”

 

These new questions are transforming the essence of the market. In recent years, the carbon market has faced a complex crisis of transparency disputes, methodological uncertainty, and eroding trust. A transaction model based only on the quantity of reductions can no longer sustain credibility. From now on, the market must prove the real-world impact behind the reductions to remain viable.

 

 

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1. From Quantity to Quality — A Structural Transformation of the Market

The shift away from “tonnage-based” evaluation is clear.
Aggregating mitigation outcomes is no longer enough to ensure policy credibility or financial value.

 

The institutional environment has fundamentally changed. With Article 6 of the Paris Agreement entering full implementation, emission reductions are no longer subject to voluntary reporting. Countries now carry obligations for corresponding adjustments and double-counting safeguards, making accounting integrity and real mitigation impact more important than the mere number of issued credits.

 

UN oversight and reporting systems have also become more demanding. What was once EIA (Environmental Impact Assessment) has now evolved into ESIA (Environmental and Social Impact Assessment), requiring integrated evaluation of environmental, social, economic, and cultural impacts. This reflects a global shift toward recognizing that carbon projects are not purely technical mitigation activities—they must also ensure the balanced development of local communities and ecosystems.

 

National reporting has likewise shifted from Biennial National Reports (BNR) to Biennial Transparency Reports (BTR) under Article 13. Reporting has moved from “what was reduced” to “how and how transparently it was implemented.”

 

Meanwhile, the rise of regulation-driven demand—such as CBAM and CORSIA—has made the origin and quality of credits central to corporate competitiveness and global supply chains.

 

As a result, the carbon market is moving from “How much was reduced?” to “How was it reduced, and how much did it contribute to improving human and natural systems?”

 

This is not a simple evolution of environmental policy but a structural signal that the market is shifting from quantitative competition to qualitative and trust-based competition—and this shift is already reshaping global finance, industrial strategy, and supply-chain architecture.

 

 

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2. The Rise of Non-Carbon Benefits — The New Language of Market Trust

When mitigation projects deliver benefits in health, livelihoods, biodiversity, and gender equality, their value can no longer be defined in numerical terms alone. Market trust is now increasingly measured by a more fundamental question:

“What positive change did the mitigation deliver?”

 

International registries have already embedded this transition into their standards:

ㆍGold Standard requires projects to contribute to at least two SDGs and mandates SDG impact reports during registration and verification.

ㆍVerra certifies co-benefits through SD VISta.

ㆍART-TREES (2023 revision) requires formal reporting of non-carbon benefits.

Across all registries, carbon volume alone can no longer guarantee credibility.

 

Rating agencies reflect the same trend. BeZero and Calyx Global evaluate not just carbon integrity but also social impacts, ecological contributions, and SDG alignment. The market is expanding into a dual framework where carbon MRV operates alongside impact MRV, which tracks community and ecosystem outcomes.

 

Investors are moving in the same direction. ESG funds and climate-finance institutions increasingly favor impact-linked investment over volume-based approaches. Non-carbon benefits have become a new language of trust, and a decisive factor in determining the long-term value of carbon credits.

 

 

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3. Sustainability — Not Optional, but Essential

This shift is not a matter of choice but a structural necessity, for three key reasons.

 

First, the crisis of trust destabilized the market.

Expired methodologies, incomplete data, and persistent overestimation controversies undermined confidence.
“Tonnage value” became an unstable asset.
To rebuild trust, the market introduced new standards—co-benefits and sustainability.

 

Second, criticism grew around carbon projects that harmed livelihoods or ecosystems.

The core question expanded from “How much was reduced?” to: “How are benefits shared, and who receives them?”

 

Climate justice and inclusive benefit-sharing are now central evaluation criteria.

 

Third, global financial markets already treat sustainability as a prerequisite.

Capital does not flow to projects that fail to align with the SDGs. Investors increasingly seek projects that guarantee sustained, long-term impact, not merely reductions.

 

Together, these drivers are pushing the carbon market toward a more mature, demanding, and accountable model. Sustainability has become both the ethic and the operating language of the market. Carbon markets are now judged not by the quantity of reductions but by the quality of their impacts—and sustainability is emerging as the primary determinant of market trust and value.

 

 

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A Compass for the Future

The social value, ecological restoration, and economic resilience generated by mitigation projects have become the new standards for proving the sustainability of the carbon market itself. Within these standards lie the stories of community livelihoods rebuilt, ecosystems restored, and regions strengthened.

 

Only when Carbon Integrity and Social Integrity are demonstrated together can the true quality of a credit be established. We now stand at the center of a new paradigm—one defined by a quality-driven carbon market.

 

The ultimate goal of the carbon market is the creation of high-quality ITMOs. Preparing for that future requires:

ㆍstable and consistent credit quality,

ㆍadequate supply,

ㆍtransparent and data-driven verification systems,

ㆍstructures that guarantee real sustainability, and

ㆍnew approaches that capture both quantitative outcomes and the social and ecological narratives behind them.

 

At the forefront of this transformation is a market that places people and nature at its core, evaluating itself not by “how much was reduced”, but by “what change those reductions created.”

 

The stability of quality, assurance of sustainability, and evidence of real-world effectiveness will define the future competitiveness of the carbon market.