Corporate Attitudes Towards Carbon Credits (2024-2025)
General Trends
In recent years, corporate attitudes towards carbon credits have experienced a significant shift, particularly following growing concerns over the integrity of the voluntary carbon market (VCM). An increasing number of industry-leading companies are moving away from reliance on cheaper carbon credits, shifting instead towards direct emission reductions and investing in more expensive yet higher-quality carbon removal projects.
Sector Specific Developments
Technology Companies
Tech giant Google has recently undertaken a substantial revision of its climate-neutral strategy, shifting away from its earlier heavy reliance on low-cost carbon credits. Previously, Google primarily offset emissions through purchasing REDD+ credits from projects aimed at preventing deforestation. However, this strategy faced criticism for potentially overstating environmental benefits, as certain projects lacked verifiable additionality. For instance, in 2022, Google purchased nearly three million tonnes of carbon offsets from renewable energy projects that reportedly could have proceeded without additional financial support, raising concerns about the effectiveness of these offsets.
Google’s latest environmental report reveals that its carbon footprint increased sharply by 48% between 2019 and 2023, driven primarily by intensified use of energy-intensive artificial intelligence technologies, which also doubled its energy consumption over the same period. In response, Google has committed to achieving net-zero emissions by 2030 through significant internal emission reductions and active investment in carbon removal projects. In 2024 alone, Google invested over $200 million into dedicated carbon removal market funds and substantially increased purchases of high-quality carbon removal credits.
Financial Institutions
HSBC recently abandoned plans to establish a dedicated carbon credit trading desk, primarily due to concerns surrounding integrity and transparency within the VCM. This decision followed a significant downturn in the voluntary carbon market, which shrank nearly 25% in 2023 due to credibility issues surrounding credit issuance and effectiveness. HSBC’s carbon credit trading division, initially intended to trade carbon credits and finance carbon reduction projects, was formally discontinued in November 2024 after only a short operational period, with staff reassigned to other divisions.
HSBC’s strategic pivot aligns with the vision of its newly appointed CEO, George Elhedery, who emphasises streamlining the organisation. While HSBC no longer directly participates in carbon credit trading, the bank continues to support the low-carbon transition through clean energy investments, carbon removal technologies, and infrastructure projects that address emissions directly.
Energy & Aviation Companies
Similar strategic shifts are evident among major energy companies like Shell. Despite being the largest disclosed purchaser of carbon credits in 2023, Shell has recently announced plans to divest most of its interests in nature-based carbon projects, citing increasing uncertainty within the voluntary carbon market. Similarly, airlines such as Delta Air Lines and EasyJet have started to move away from relying solely on carbon offsets to achieve carbon neutrality, instead prioritising direct emissions reductions.
These developments indicate a broader industry trend towards reassessing carbon credit strategies, emphasising genuine emission reductions and investment in higher-quality carbon removal initiatives.
Regulatory Environment & Market Integrity
Meanwhile, the regulatory environment for voluntary carbon markets continues to evolve. Notably, during COP29 (November 2024), negotiators formally approved Article 6.4 of the Paris Agreement, creating a unified international carbon market under United Nations supervision. This move aims to enhance transparency, improve market integrity, and restore trust. Furthermore, the Integrity Council for the Voluntary Carbon Market (IC-VCM) has introduced new quality standards to address market credibility concerns and bolster liquidity. These regulatory advancements indicate that the voluntary carbon market is undergoing a crucial reform process to regain credibility and attract renewed corporate participation.
The Role of Carbon Taxes in Driving the Carbon Credit Market
Overview of Carbon Tax Mechanisms
A carbon tax is a policy tool designed to increase the cost of greenhouse gas emissions, thus incentivising businesses and individuals to reduce their carbon output. The fundamental rationale behind a carbon tax is to internalise environmental costs into corporate operations via market mechanisms, making low-carbon technologies and emission reduction measures more economically attractive. Such policies effectively encourage the market to proactively reduce emissions by prompting businesses to pursue cleaner and more efficient production practices to minimise their carbon costs.
Relationship between Carbon Taxes & Carbon Credits
The implementation of a carbon tax directly increases the cost of emissions for businesses, prompting them to seek cost-effective methods to reduce their carbon footprint. In response, companies often purchase high-quality carbon credits to offset emissions that they cannot immediately eliminate, thereby lowering their overall emission-related costs. Thus, carbon taxation significantly stimulates demand in the carbon credit market, driving up both the price and overall activity within the market.
Case Study: Recent Developments in the EU & UK Carbon Markets
According to Reuters (2024), the European Commission is currently evaluating the potential reintroduction of carbon credits into its Emissions Trading System (EU ETS). Previously, due to concerns regarding the environmental effectiveness of low-cost international carbon credits, the EU banned their use in its carbon market from 2020, emphasising instead direct emission reductions. In April 2024, the EU formally adopted the Carbon Removal Certification Framework (CRCF)—the EU’s first official certification framework for permanent carbon removals and carbon farming—establishing strict certification criteria including permanent storage, additionality, quantifiable benefits, and transparent monitoring and reporting mechanisms. The creation of the CRCF is viewed as an important step towards potentially reintegrating high-quality carbon credits into the EU ETS, with the European Commission set to decide on their formal inclusion by 2026.
Additionally, in February 2025, the EU introduced the Clean Industrial Deal, providing over €100 billion in financing support to rapidly decarbonise energy-intensive industries. This deal also includes the Carbon Border Adjustment Mechanism (CBAM), designed to set carbon-related import thresholds, thereby encouraging other global economies to adopt similar carbon pricing policies and indirectly enhancing international carbon market activity and price levels.
Meanwhile, following the UK’s exit from the EU, the UK launched its independent emissions trading scheme (UK ETS) in 2021, setting ambitious emission reduction targets of a 68% reduction by 2030 and 78% by 2035, aiming for net-zero emissions by 2050. Data released by the London Stock Exchange in February 2024 indicated that, impacted by geopolitical factors and tightening policies, UK ETS allowance prices (UKA) dropped by 34% compared to 2022, averaging approximately €65, about €22 lower than the EU ETS price during the same period. However, due to strict minimum auction prices and cost containment mechanisms (CCM), the UK ETS market has remained broadly stable.
Furthermore, on 25 February 2025, Japan officially passed legislation requiring companies emitting over 100,000 tonnes of CO₂ per year to participate in its mandatory Emissions Trading System (ETS). This measure is part of the revised Green Transformation (GX) Law, demonstrating Japan’s commitment to leveraging market mechanisms to reduce greenhouse gas emissions. Overall, carbon taxation and related market policies have accelerated emission reduction efforts and stimulated the adoption of carbon credits among companies regionally, while indirectly contributing to the gradual alignment and improvement of global carbon market standards.
Future Outlook
Looking ahead, three key trends are anticipated in the global carbon credit market:
- Carbon credit prices are expected to continue rising, particularly as high-quality carbon removal credits attract increasing interest from businesses, significantly expanding market demand and transaction volumes.
- As frontier technologies such as Direct Air Capture with Carbon Storage (DACCS) and Bioenergy with Carbon Capture and Storage (BECCS) achieve greater scale, costs associated with technology-driven carbon removal projects will gradually decline.
- Improvements in national and international regulatory frameworks will enhance the transparency and reliability of carbon markets. In particular, the implementation of Article 6 of the Paris Agreement and the establishment of the EU’s Carbon Removal Certification Framework (CRCF) will further standardise and stabilise global carbon credit markets.
As businesses navigate evolving regulatory landscapes and market demands, strategic adaptation and a commitment to genuine emission reductions will be essential for sustainable growth in an increasingly carbon-constrained global economy.
