The global carbon credit market entered 2026 under tightening supply conditions, with aviation-linked compliance demand increasingly shaping pricing, project selection, and overall market structure, according to new data released by independent carbon analytics provider Sylvera.
Its latest Carbon Data Snapshot for Q1 2026 shows a decline in overall retirements, falling 8% year on year. Total retirement value decreased from USD 309.47 million to approximately USD 290 million, signalling a shift in market behaviour away from volume-driven offsets and toward higher-quality, higher-value credits.
Despite lower retirement volumes, pricing remained firm. The average price per carbon credit rose slightly to USD 5.69 in Q1 2026, up from USD 5.60 a year earlier, reflecting continued demand for higher-grade instruments and a gradual rebalancing of supply toward compliance-linked standards.
Flight toward higher-quality credits
The data highlights a widening valuation gap across credit ratings. Investment-grade credits rated BBB+ now average USD 20.10 per credit, while lower-rated B-grade credits trade at approximately USD 7.80. Combined AA, A, and BBB-rated credits account for 62% of total market value, underscoring a structural shift toward higher-integrity supply.
Within REDD+ forestry credits, BBB+ rated units have risen for three consecutive quarters to USD 9.60 in Q1 2026, while lower-rated REDD+ credits remained flat at USD 3.70, further reinforcing a quality-driven price divergence.
Compliance-linked demand accelerates
A growing share of issuance is now aligned with aviation compliance frameworks. For the first time, CORSIA-eligible credits account for nearly 50% of new issuances, driven by expansion in eligible methodologies such as Improved Forest Management (IFM) and clean cooking initiatives, alongside the decline of legacy renewable energy projects that fall outside compliance scope.
Accreditation under the Core Carbon Principles (CCP) has also expanded significantly, rising from under 3% of issuances in 2023 to 18% in Q1 2026. The CCP premium has more than doubled over the same period to USD 3.83 per credit, reflecting increased buyer preference for independently verified integrity standards.
Emerging project categories reshape supply base
New supply sources are playing an increasingly important role in reshaping the market’s composition:
Clean Water projects have seen the most significant expansion, growing 38-fold since 2021 to reach 8.2 million credits annually by the end of 2025. This segment now represents the largest emerging subcategory, with sustained year-on-year growth.
Marine and Mangrove Carbon projects have also expanded steadily, reaching 5.3 million credits. These nature-based solutions continue to attract premium pricing due to high permanence characteristics and strong biodiversity co-benefits.
Nitrous oxide destruction projects (NDAAP), primarily at nitric acid facilities, have increased 17-fold since 2021 to 6.7 million credits, supported by strong measurability and alignment with international aviation compliance frameworks.
Regenerative Agriculture has emerged as the fastest-growing segment, expanding from near-zero activity through 2024 to 3.0 million credits in 2025, and annualising at over 5 million credits in Q1 2026.
Supply constraints intensify outlook
According to Sylvera Chief Executive Officer Allister Furey, the market is entering a phase defined by tightening supply and increasing differentiation between legacy and investment-grade credits.
He noted that while overall volumes have declined, pricing resilience reflects a market increasingly driven by quality, compliance readiness, and methodological rigor. However, he also pointed to a growing structural constraint, with high-quality credits becoming progressively scarcer.
Furey further highlighted that bottlenecks linked to Article 6 authorisations are creating a gap between theoretical CORSIA-eligible supply and credits that are practically available for compliance use. As a result, the market is expected to experience further tightening in deliverable supply throughout 2026.
Market observers anticipate that these dynamics will continue to favour high-integrity project types, while accelerating consolidation around compliance-linked demand—particularly as aviation operators seek eligible offsets in advance of tightening international carbon obligations.
