New WFE Research analyses global price inequalities in the Voluntary Carbon Market

 

PRESS RELEASE

New WFE Research analyses global price inequalities in the Voluntary Carbon Market

London, 4 December 2025 - The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has published new research which provides the first transaction-level evidence of how prices form in the voluntary carbon market (VCM). It reveals significant disparities between advanced and developing economies and offers insights for improving transparency and fairness in carbon trading. 

The WFE Research Paper, Carbon Inequality: Price Discovery and Market Dynamics in the Voluntary Carbon Market, authored by Dr Ying Liu, Financial Economist at the WFE, analyses more than 250,000 carbon credit transactions across 2,200 projects worldwide between 2017 and 2024, using econometric and machine learning methods.

Key Findings:

• Credits from nature-based solutions such as forestry and land use projects are priced 67% higher than those from technology-based projects like renewable energy.
• Older credits trade at 9–23% discounts, reflecting buyer preference for newer vintages, presumably perceived as more credible.
• Projects with larger available inventories experience lower future returns, confirming that excess supply depresses prices.
• Past returns and prior inventory levels are the strongest predictors of near-term price movements.
• Credits from advanced economies are priced 28% higher on average than those from emerging markets and developing economies (EMDEs), even after adjusting for project characteristics. The premium is closely linked to stronger rule of law and governance quality of the jurisdiction where the carbon project is located, not to investor home bias.
• Retirements of credits peak in December, aligning with corporate sustainability reporting cycles and offset deadlines.
  
  

The analysis shows that governance quality and institutional strength of the project’s host jurisdiction play a central role in determining carbon credit value. This is why price discrepancies occur between carbon credits in advanced economies compared to EMDEs.

Dr Pedro Gurrola Perez, Head of Research at the WFE, said, “Climate finance is critical for sustainable development in Emerging Markets and Developing Economies. While this is where most carbon offset projects are located, these credits are priced lower than those located in advanced economies. Without closing this pricing gap, the VCM won’t reach its true potential.”

Nandini Sukumar, CEO of the WFE, said, “To make the VCM a truly global climate finance mechanism, we must ensure pricing reflects project quality - not jurisdictional biases. This underscores the urgent need to enhance transparency and address institutional disparities in the VCM. Strengthening governance and pricing mechanisms in emerging economies could expand access to climate finance for high-quality projects in these regions.”

Read the full paper here.

For more information, please contact:

Cally Billimore

Communications Manager

[email protected]

+44 7391 204 007

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents the providers of over 250 pieces of market infrastructure, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia Pacific, 43% in EMEA and 20% in the Americas region. The WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some USD 1.1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. The exchanges covered by WFE data are home to over 49,054 listed companies, and the market capitalization of these entities is over USD116.58tr; around USD155tr in trading annually passes through WFE members (at end-2024).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back 50 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

Twitter: @TheWFE

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