Nearly 1 in 4 carbon credits retired in 2024 were used to satisfy a compliance carbon pricing obligation.
That’s up from 9% in 2023.
2024 may have seen an unusual spike in carbon credit retirements to satisfy compliance carbon pricing programs since it was the end of a 3-year compliance period cycle for the California and Quebec ETSs. Fifty-nine percent of credits retired in 2024 for compliance purposes were used to satisfy obligations for one of these two programs. As a result, we may not seem the same level of retirements for compliance reasons in 2025.
But overall, carbon credits are playing a growing role in compliance carbon pricing schemes.
40% of government-run carbon pricing programs around the world permit some use of credits to meet their obligations. And, several of these programs are increasing the portion of the tax obligation that companies can meet with credits.