Investing in Carbon Projects in 2025: What You Should Know

As global climate commitments tighten and corporations face increasing pressure to achieve net-zero targets, carbon projects have emerged as an important tool for managing measurable climate impacts. However, the carbon market is evolving rapidly, reshaping new rules, technologies and risk investment strategies. This blog outlines what you need to know to stay ahead of this dynamic landscape in 2025.

Why invest in carbon projects?

Climate change and corporate responsibility are driving demand for carbon credits. Governments are tightening regulations, and companies are racing to meet ambitious net-zero targets. For businesses, investing in carbon projects is a way to demonstrate climate leadership and take real action against the climate crisis. For investors, it is an opportunity to support projects that create both environmental and financial opportunities.

Carbon Credit Market

The global carbon credit market is expected to grow from US$933 billion in 2025 to approximately US$16.4 trillion by 2034, at a compound annual growth rate (CAGR) of 37.68%. This growth is driven by stringent government policies, growing corporate commitments, and increasing consumer expectations for sustainability.

Europe is currently the largest market, but Asia and North America are growing rapidly as governments implement emissions trading systems (ETS) and other regulatory frameworks.

Key Considerations for Investors

Investing in carbon projects in 2025 requires a strategic and informed approach, as the evolution of the market is leading to higher integrity and increased complexity. Here are the primary paths and key considerations for investors:

Direct Purchase of Carbon Credits: One way to invest in carbon projects is through the direct purchase of carbon credits. Investors can purchase these credits directly from project developers, which allows for a closer relationship with the project and a better understanding of its environmental impact. Alternatively, credits can be purchased and retired through government registries such as Verra’s Verified Carbon Standard (VCS) program or Gold Standard, which provide strict rules and tracking systems to ensure transparency and accountability. A growing trend in this area is the move towards pre-issuance investments and multi-year commitments, which help companies set prices, manage future costs, and support long-term sustainability goals.

Carbon Credit Platforms and Intermediaries: Another way to invest in carbon projects is through carbon credit platforms and intermediaries. Online platforms and brokers are making carbon credit transactions more efficient, transparent, and accessible—tools like Verra Project Hub help streamline project registration and management. Some platforms also offer curated portfolios of high-quality carbon removal projects, which are especially useful for small teams or companies with limited capacity for detailed project evaluation.

Investing in Carbon-Focused Companies (Stocks and ETFs): Investors can gain exposure to the carbon market by investing in carbon-focused companies through stocks and ETFs. Buying shares in companies that work to reduce or offset carbon emissions can provide both environmental impact and financial potential. Alternatively, carbon ETFs provide diversified access by investing in a variety of companies involved in the carbon market. Examples include the Kreinshares European Carbon Allowance Strategy ETF (KEUA), the California Carbon Allowance Strategy ETF (KCCA), and the Global Carbon Strategy ETF (KRBN).

Supporting Carbon Project Developers:

Direct Investment in Projects: Investors can provide direct capital to project developers, particularly for nature-based solutions such as Direct Air Capture (DAC) or carbon farming, to help them scale up. This can include investing in pre-issuance projects to secure early access and future supply.

Partnerships: Companies can partner with organizations like Spacenus, which specializes in technology-enabled carbon solutions for agriculture, to integrate sustainable practices into their supply chains and generate verifiable carbon outcomes.

How to Invest in Carbon Projects

Prioritizing High-Quality and Verified Credit:

Integrity over Volume: The market is shifting towards prioritizing integrity. Buyers are increasingly looking for projects that demonstrate greater transparency, measurable impact, and strict adherence to new, rigorous standards.

Due Diligence: Rigorous due diligence is “non-negotiable” and a core part of any investment strategy. Investors must partner with companies that can provide verifiable evidence of a project’s integrity.

Premium Pricing: High-quality credits command premium pricing, reflecting their increased credibility and impact.

Understanding Certification Standards and Registries:

ICVCM Core Carbon Principles (CCPs): These principles set rigorous, high-level standards for credit quality, which serve as the “benchmark” for the entire market.

VERRA and Gold Standards: These leading standard-setters provide rules, requirements, and carbon accounting methodologies. They are constantly updating their framework to be compliant with the Paris Agreement and to combat greenwashing.

Public Registry: Platforms like the Verra Registry track credit issuance, ownership, and retirement, ensuring transparency.

Using MRV (Monitoring, Reporting, and Verification) and AI:

Transparency: AI is transforming MRV by improving satellite image analysis, sensor data interpretation, and project impact prediction, directly addressing historical issues of over-crediting.

Satellite Verification: Major corporate buyers already require satellite verification for credit purchases, and by 2027, an estimated 90% of Voluntary Carbon Market (VCM) transactions will require remote sensing verification.

Real-time Monitoring: New satellite technologies (LiDAR, hyperspectral imaging) enable real-time carbon sequestration monitoring, providing immediate evidence of carbon removal.

Diversification and long-term investment strategy:

Portfolio mix: A diversified portfolio should include a strategic mix of both emission reduction and carbon removal projects, as well as a balance between nature-based and technology-based solutions.

Long-term commitment: Shifting from short-term spot purchases to multi-year commitments and pre-issuance investments to ensure price stability and align with long-term sustainability goals.

New asset classes: The integration of carbon markets is opening up new asset classes, from carbon-linked derivatives to digital credits, increasing liquidity and innovation.

Key trends to watch in 2025

Carbon removals are gaining momentum: Removal credits now account for a larger share of retirement activities, reflecting a shift towards projects that directly remove CO₂ from the atmosphere.

Innovation in climate technology: Carbon removal, carbon capture and other climate intervention technologies are flowing, with viable solutions moving from the lab to the market.

Institutional and retail participation: Carbon finance is no longer the exclusive domain of multinational corporations. Institutional investors and individuals are increasingly allocating funds to carbon projects, recognizing both the policy and financial benefits.

Conclusion

Investing in carbon projects in 2025 offers a unique opportunity to support climate action while positioning your portfolio for long-term growth. By focusing on project quality, diversifying across types, and staying attuned to market and regulatory trends, you can make informed, forward-looking decisions that generate both measurable climate impact and long-term financial returns.