Welcome to ClearBlue Markets' State of the Global Carbon Markets Global Quarterly Report – Q4 2025. This edition reviews the regulatory catalysts and supply-demand fundamentals that defined the global landscape as we headed into the new year. Comprehensive coverage spans WCI, RGGI, Clean Fuels, Asian Markets, Oceania Markets, Canadian Markets, Voluntary Carbon, the EU-ETS & UK-ETS, RECs, and more.
Published quarterly, this review leverages ClearBlue’s award-winning market intelligence, equipping decision-makers with the strategic insights to:
- Monitor Policy Evolution: With ambition and affordability, track developments like the Cap-and-Invest extension legislation in California, Canada-Alberta MOU and the EU’s 2040 Climate Target.
- Assess Market Fundamentals: Examine supply and demand drivers like the surge in data centers impacting electricity loads and emissions, complementary policies aimed at electrification in transportation and buildings and the complex interactions determining feedstocks for biofuels.
- Inform Capital Allocation: Utilize pricing data to distinguish value, such as the "flight to quality" in the VCM and the shifting economics of renewable diesel in California.
- Benchmark Sustainability Strategy: Contextualize performance against trends like the resilience of Canadian CFR credits and the valuation gap in voluntary credits.
Key Market Developments in Q4 2025
North America: Volatility and Delays In the WCI, secondary market prices for California Carbon Allowances (CCAs) remained in a tight range at end-2025 as participants awaited updates on the stalled Program Review. Meanwhile, RGGI markets experienced significant volatility, driven by high power demand from data centers and the AI sector, alongside political shifts such as a Democratic win in the Virginia gubernatorial election. In Washington, Cap-and-Invest allowances are approaching the statutory price ceiling as the APCR pool nears exhaustion, though new supply mechanisms via HB 1975 are expected to moderate future costs by increasing supply as Washington pursues WCI linkage. Following the Canada-Alberta MOU promising a minimum effective credit price, TIER prices gained momentum, rebounding to the CAD 35–36 range. The federal benchmarking exercise to strengthen and harmonize provincial carbon pricing, including for TIER, will play out in 2026.
Clean Fuels & The VCM "Flight to Quality" California LCFS prices rose in Q4, finding support from collapsing renewable diesel margins and expectations of bank draws in the second half of 2025. In the Voluntary Carbon Market (VCM), while overall market volumes contracted, a "flight to quality" drove a 46% price premium for Tier 1 high-integrity credits over Tier 3 assets. This structural correction saw surging activity in Carbon Dioxide Removal and Agriculture, while traditional renewable energy projects faced downward pressure.
Global Regulatory Shifts: EU and Asia European markets saw upward momentum, with higher EUA prices driven by investment funds building long positions. Significant policy progress was made with a provisional agreement on the EU’s 2040 Climate Target (90% reduction), opening the door to the use of international project-based credits, and the announcement of a timeline to finalize UK-EU ETS linkage talks by 2026,.
In Asia, China’s national carbon market witnessed a "V-shaped" recovery, rallying 30% by mid-November due to regulatory stabilization measures and a tenfold increase in banking quotas that encouraged industrial buying. Conversely, New Zealand markets faced steep declines following announcements of major legislative changes that shook market confidence.
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