Emerging Market Trends in Carbon Trading: What Businesses Need to Know for 2026 and Beyond
- jaryl3
- Dec 17, 2025
- 11 min read
Carbon markets are no longer experimental side quests for sustainability teams. They are tightening, professionalizing, and becoming embedded in core business strategy. In parallel, biochar has moved decisively from niche to mainstream as a high-durability carbon removal class, supported by clearer methodologies and more rigorous monitoring, reporting, and verification (MRV).
China sits at the center of this shift. Its national Emissions Trading System (ETS) is expanding beyond power into heavy industry, while the voluntary China Certified Emission Reduction (CCER) market has restarted with new governance, new infrastructure, and a direct link to compliance demand. Together, these developments create real procurement and project-development opportunities—but also raise the bar on quality, claims discipline, and risk management. For businesses, the message is clear: carbon is becoming a managed input, not a marketing afterthought.
The Carbon Market in 2025: A System Coming of Age
The global carbon credit landscape is undergoing a structural transition. Carbon pricing mechanisms now cover roughly 23% of global emissions, up from just 5% two decades ago, and emerging markets account for a growing share of that expansion.
Two parallel systems dominate:
Compliance markets, where regulated entities must surrender allowances against verified emissions.
Voluntary markets, where credits are issued to projects that avoid or remove emissions and are purchased for claims, internal targets, or strategic positioning.
China now operates both at national scale—and critically, has begun linking them.
China’s ETS (CEAs): From Intensity to Scarcity
Launched in 2021 with the power sector, China’s national ETS allocates China Emission Allowances (CEAs), historically based on intensity benchmarks with generous free allocation. That era is ending.
During 2024–2025, steel, cement, and aluminum were added. Allocation rules tightened, vintage discipline was introduced, and policymakers signaled a transition toward absolute caps for selected sectors from 2027, with broader adoption by 2030. While prices have been volatile, the direction of travel is unmistakable: tightening supply and rising compliance value.
CCER: The Voluntary Market Comes Back
After a long pause from 2017 to 2023, China’s CCER program fully rebooted. Trading resumed on January 22, 2024, with updated methodologies, a national registry, and exchange-based trading at the Beijing Green Exchange. The first new issuances arrived on March 6, 2025, with over 9 million tonnes from offshore wind and concentrated solar power projects.
The key change is structural: eligible post-2024 CCERs can now offset up to 5% of ETS compliance obligations. That single design choice transformed CCERs from a purely voluntary instrument into a compliance-adjacent asset—and immediately tightened demand.
Biochar’s Rise: A Supply Story, Not a Hype Cycle
If carbon removal markets have a breakout winner, it is biochar. Once viewed as a niche agronomic product, biochar has become one of the most widely adopted and delivered forms of durable carbon removal. The reason is not ideology—it is execution.
What Biochar Is (and Why It Matters)
Biochar is a carbon-rich solid produced by pyrolyzing waste biomass under limited oxygen. When applied to soils or embedded in materials such as concrete or composites, a significant fraction of its carbon remains stable for decades to centuries, delivering durable CO₂ removal alongside practical co-benefits.
These co-benefits matter. Improved soil water retention, nutrient efficiency, yield resilience, and emerging construction applications make biochar attractive not just to climate teams, but to supply chains and operators.
The Numbers Behind the Momentum
Between 2022 and mid-2025, roughly 3.04 million tonnes of biochar carbon removal credits were contracted globally. Of that, 1.6 million tonnes were purchased in the first half of 2025 alone.
By mid-2025, approximately 93% of industrial biochar supply for the year was already committed. This supply tightness is not theoretical—it is structural. Operational projects with proven delivery records now command a 10–20% premium, reflecting buyer preference for reliability over promises.
Prices have stabilized accordingly. In late 2025, U.S. biochar credits for near-term delivery traded around USD 150 per tonne of CO₂, with forward 2026 delivery close behind. More broadly, high-quality credits across markets trade at roughly a 30% premium over lower-integrity tiers.
Methodologies Catch Up to Reality
Momentum accelerated because standards caught up:
Verra VM0044 (v1.2, June 2025) strengthened additionality tests, production accounting, and end-use traceability. Alignment with ICVCM Core Carbon Principles reinforced buyer confidence, with a major v2.0 revision underway.
Puro.earth continues to issue CO₂ Removal Certificates (CORCs) for biochar under a long-standing methodology favored by corporates seeking durable removals.
As integrity initiatives increasingly favor permanence and measurability, biochar has benefited disproportionately relative to avoidance-based credits.
Several factors explain biochar's ascendancy.
First, it delivers on one fundamental requirement: reliability. Unlike some emerging carbon removal technologies still in early deployment stages, biochar production infrastructure already operates at scale in multiple regions.
Second, it solves multiple problems simultaneously. Biochar projects generate carbon credits while also producing byproducts—soil amendments, bio-fertilizers, and biofuel—that create additional revenue streams beyond carbon sales. This diversification of revenue sources makes projects more economically resilient and attractive to investors.
Third, biochar addresses waste management challenges, making it particularly attractive in regions with agricultural waste streams or industrial processing. In one documented case, a waste management company in Zhejiang, China processing 5,000+ tons of agricultural and garden waste annually generated approximately 1,000 tons of biochar, yielding ~2,000 carbon credits per year at current market rates and generating roughly $300,000 in annual carbon credit revenue.
China Through a Carbon Lens: CEAs vs CCERs
CEAs: Mandatory, Expanding, Tightening
China Emissions Allowances (CEA) are the tradable unit of China’s ETS. It represents the mandatory compliance carbon market established in 2021. This system covers approximately 40% of national emissions and is expanding to eventually cover around 8 billion tons of emissions. In this system, major emitting entities must obtain allowances corresponding to their emissions levels. Any shortfall requires purchasing additional allowances at market prices.
Power remains the anchor sector, but heavy industry inclusion has fundamentally changed the scale and stakes. Vintage rules are beginning to curb hoarding, and allocation tightening is pushing companies to treat carbon as a real operating cost rather than a compliance formality.
As of December 2024, CEA prices hovered around ¥97.74 per metric ton of CO₂ equivalent (approximately $13.59). Analysts forecast CEA prices rising to ¥100 per metric ton in 2025 and potentially doubling to ¥200 by 2030, as emissions caps tighten and scarcity increases. The CEA system's logic is straightforward: tighter emissions caps drive higher allowance prices, creating economic incentives for emissions reduction investments.
CCERs: Scarce, Valuable, Strategically Linked
The China Certified Emissions Reduction (CCER) system represents something different—a voluntary market for emissions reductions. Companies can generate CCERs by implementing emissions reduction or removal projects (renewable energy, reforestation, biochar production, methane utilization) and trade these credits in a separate market.
The CCER system encountered a major disruption when the government paused new project registrations in 2017 to refine regulatory frameworks. After seven years of inactivity, the system restarted in January 2024, with the first CCER 2.0 project registered on December 3, 2024. This restart carries enormous strategic significance because it reopens what had been a closed market, creating new opportunities for project developers globally.
As of October 2025, China's carbon market entered unprecedented territory: CCER credits were trading at ¥70.77 per ton—substantially higher than CEA allowances at ¥55.42 per ton. This inversion—where voluntary credits trade above mandatory allowances—reveals critical market dynamics. The CCER prices reflect extreme scarcity (old CCERs have nearly exhausted; new ones issue slowly) combined with the 5% offset limit creating concentrated demand from compliance entities desperately seeking available credits. This price relationship essentially says that "voluntary" carbon reduction, when scarce, commands higher value than the mandatory allowances themselves.
For international businesses, this inverted pricing creates an intriguing signal: CCER credits are becoming a valuable asset under the EU's Carbon Border Adjustment Mechanism (CBAM), which recognizes carbon pricing under Article 6 of the Paris Agreement. Chinese exporters to the EU increasingly value CBAM compliance, making CCERs strategically important.
For now, biochar is not yet an approved CCER methodology. Companies pursuing biochar credits in China typically rely on international standards such as Verra or Puro while closely monitoring CCER methodology expansion. Participation in CCERs remains restricted to domestic entities.
For companies with operations in or trade relationships with China, several strategic implications emerge.
First, the CCER market restart creates near-term scarcity premiums for early-issued credits. Companies developing biochar or other removal projects in China should prioritize rapid certification to capture these premiums before supply normalizes.
Second, the CEA-CCER linkage creates arbitrage opportunities for sophisticated participants. Companies managing emissions across China can optimize between CEA purchases and CCER acquisitions based on relative pricing.
Third, the expansion of CEA to additional sectors and the rising price trajectory make carbon management increasingly material to operating costs. Companies should begin systematic carbon accounting and exploration of both compliance and voluntary market participation.
Challenges and Opportunities: Navigating a Market That Is Growing Up
The global carbon market today sits in an uncomfortable but productive tension. On one hand, demand for credible carbon solutions is accelerating. On the other, the market’s underlying architecture is still being assembled. For businesses, this creates a landscape where missteps can be costly—but where informed positioning can generate outsized advantage.
The Challenge Layer: Where Friction Still Dominates
The first and most persistent challenge is fragmentation. Carbon markets did not emerge from a single global rulebook; they evolved jurisdiction by jurisdiction, standard by standard, often in response to local political and economic priorities. As a result, the market remains divided across compliance systems, voluntary standards, registries, and claim frameworks that do not always align neatly with one another.
A carbon credit issued under one methodology may be fully acceptable in a voluntary net-zero claim, partially usable in a compliance system, or entirely excluded under another regulatory regime. This lack of fungibility complicates portfolio construction for multinational companies and limits the ability to arbitrage supply across borders. It also increases transaction costs, as legal, sustainability, and finance teams must continuously interpret how credits can be used, disclosed, and defended.
Overlaying fragmentation is regulatory uncertainty. Carbon policy is evolving faster than most corporate planning cycles. Governments are simultaneously tightening emissions caps, revising allocation methodologies, introducing vintage restrictions, and redefining how voluntary credits can be used for compliance or claims. In China, for example, the shift from intensity-based benchmarks toward absolute caps introduces uncertainty around future allowance scarcity, pricing, and banking rules. Similar transitions are underway globally, from the European Union’s Carbon Border Adjustment Mechanism to evolving disclosure requirements tied to net-zero commitments.
This uncertainty creates planning risk. Projects that appear viable under today’s rules may face different economics under tomorrow’s guidance. For buyers, procurement strategies optimized for current price signals may underperform if eligibility criteria or claim expectations shift. The result is a cautious market posture—longer diligence cycles, heavier legal review, and conservative assumptions that can slow deployment even as demand rises.
A third challenge lies in data quality and verification maturity. While MRV frameworks have improved substantially, particularly in compliance markets, gaps remain. Data availability, monitoring frequency, and audit consistency vary across regions and project types. In emerging markets, this can translate into higher perceived delivery risk, even for fundamentally sound projects. As standards tighten, projects that lack robust baseline data, traceable end-use documentation, or defensible permanence assumptions are increasingly filtered out.
Finally, there is a structural challenge related to market plumbing. Liquidity remains uneven. In China’s restarted CCER market, for example, early restrictions on block trades and auctions complicate presales and bilateral offtake agreements—tools that are often essential for project finance. In voluntary markets, long-term offtake remains concentrated among a relatively small group of large corporate buyers, introducing counterparty concentration risk and price sensitivity if purchasing behavior shifts.
Taken together, these challenges mean that carbon markets today reward discipline more than optimism. The era of loosely defined offsets and broad claims is closing.
The Opportunity Layer: Where Structure Creates Advantage
Paradoxically, the same frictions that create risk also create opportunity.
Fragmentation, for instance, favors sophisticated portfolio builders. Companies that invest in understanding how compliance instruments, voluntary credits, and claims guidance interact can construct portfolios that are both resilient and flexible. Mixing compliance exposure (such as CEAs) with high-integrity, durable removals (such as biochar credits under Verra or Puro) allows firms to hedge regulatory risk while maintaining reputational credibility. As scrutiny increases, this layered approach becomes a competitive advantage rather than a cost.
Regulatory tightening also creates scarcity premiums. As allocation rules harden and offset limits are enforced, demand concentrates on a narrower pool of eligible, high-quality instruments. China’s CCER market illustrates this clearly: the linkage to ETS compliance and slow issuance of new credits has elevated CCER value beyond what many expected of a “voluntary” instrument. Early movers who secured eligible supply benefit from both price appreciation and optionality as rules evolve.
Another major opportunity lies in industrial integration. For companies with access to biomass residues, waste heat, or process byproducts, carbon removal can be embedded into existing operations rather than treated as a standalone activity. Biochar exemplifies this model. When integrated into agricultural processing, waste management, or industrial supply chains, biochar projects can reduce disposal emissions, generate durable removal credits, and produce saleable physical products. This integration lowers marginal costs and reduces reliance on carbon revenue alone, making projects more resilient across market cycles.
There is also a growing opportunity in market expansion beyond today’s buyer base. Voluntary demand has historically been dominated by technology, finance, and professional services firms in North America and Europe. As carbon pricing and disclosure requirements cascade through supply chains, demand is beginning to broaden to mid-market manufacturers, exporters, and emerging-market corporates. Companies that position themselves early—either as suppliers of credits or as facilitators of insetting partnerships—stand to capture this next wave of demand.
Finally, the gradual convergence of voluntary and compliance markets points to a longer-term structural opportunity. While voluntary markets currently dominate carbon removal demand, regulatory frameworks are moving toward requiring higher-quality, durable removals for residual emissions. Businesses that develop carbon removal capabilities today—whether through procurement, partnerships, or project ownership—will be structurally advantaged when such requirements become mandatory.
How Businesses Can Engage—Practically
Clarify exposure
Determine current or future ETS coverage in China.
Model allowance shortfalls by vintage under tightening allocation rules.
Define voluntary intent
Set clear claims boundaries.
Prioritize durable removals for residual emissions.
Build a fit-for-purpose portfolio
Forecast CEAs under multiple price scenarios.
Apply strict quality screens for credits: additionality, permanence, leakage, MRV rigor, and end-use traceability.
Explore biochar in the value chain
Assess residue availability and technology options.
Pilot small-scale procurement or co-development before scaling.
Prepare for CCER evolution
Monitor eligible methodologies, vintage rules, and offset limits.
Align internal governance to avoid over-claiming.
Conclusion: Carbon as Infrastructure, Not Optics
The carbon market has crossed an important threshold. It is no longer a soft domain driven by voluntary goodwill or reputational optics. It is becoming economic infrastructure—governed by rules, constrained by supply, and priced by scarcity.
Biochar’s ascent is not an anomaly; it is a signal. Markets are converging on solutions that can deliver at scale, withstand scrutiny, and be verified with confidence. China’s expanding ETS and the restart of the CCER market underscore the same reality: the historical divide between voluntary and compliance systems is narrowing, and integrity now carries a measurable price.
For businesses, the question is no longer whether to participate, but how deliberately to engage. Carbon is becoming a managed input—like energy, commodities, or logistics—requiring procurement strategy, risk governance, and operational integration. Those who move early to secure high-quality supply, build internal capability, and embed carbon solutions into their value chains will not only reduce future compliance and reputational risk, but create durable strategic advantage.
The window for thoughtful positioning is still open. But as standards tighten, supply remains constrained, and regulation accelerates, that window will close faster than many expect.
In this next phase, carbon is not a cost center to be minimized. It is infrastructure to be built—and value to be captured.
If you or your business are exploring carbon compliance exposure, voluntary carbon procurement, or biochar as a durable carbon removal pathway—especially across China and Asia—now is the right time to assess options with clarity and discipline.
Greenchar Climate Solutions supports organizations across the full carbon value chain, from strategy and market entry to biochar project development, MRV, and credit issuance under standards such as Verra and Puro. We work with both buyers and project owners to ensure integrity, delivery certainty, and long-term value creation.
A short scoping discussion today can prevent costly missteps tomorrow. Contact us at hello@greenchar.co.