Carbon Compass – June 2025

Welcome to the June edition of Abatable's Carbon Compass newsletter. This newsletter is informed by our weekly in-depth analysis of the VCM. If you would like to receive this in your inbox, sign up to our intelligence platform.

This month: We're still buzzing from the energy of a packed London Climate Action Week, during which the Abatable team attended over 30 events across the UK capital! To mark the occasion, we made a quick recap video of our week – check it out here. 

While these proactive climate discussions were happening in London, in Brussels tense political debates were taking place about the future of the EU's long-anticipated Green Claims Directive. In our 'Most notable' news section we outline the (uncertain) state of play and ask what it means for carbon markets.

As the EU thrashes out the Green Claims Directive's future in its simplified climate and sustainability reporting landscape, government-led carbon pricing initiatives are continuing to expand globally. There's plenty of room however for crediting mechanisms to contribute to the growing percentage of emissions covered by some form of carbon price – we explore this in the 'Our perspective' section.

Elsewhere in the newsletter, our 'Chart of the month' compares Abatable's CORSIA demand forecast with those from the scheme's leading bodies involved and, in our 'Abatable news' section, we outline our supporting role in a €100mn deal for sustainable agriculture in Europe. 

Happy reading – see you next time!

Most notable

The EU Green Claims Directive is in limbo – what does it mean for carbon markets?

The EU's flagship anti-greenwashing legislation, the Green Claims Directive, is in limbo following a dramatic week of political reversals, leaving voluntary carbon market (VCM) participants facing regulatory uncertainty and a fragmented landscape for environmental claims.

What happened?

• Friday, June 20: Following a surprise response in a daily press briefing, the European Commission announced it would withdraw the Green Claims Directive, citing concerns that the inclusion of around 30 million micro-enterprises (which make up 96% of EU companies) under the Directive would create ‘undue regulatory burden’.

• Monday, June 23: The Commission then indicated it would resume negotiations if the micro-enterprise clause was dropped. But Italy’s withdrawal of support over the weekend forced the Polish Council Presidency to cancel planned trilogue negotiations due to insufficient EU Member State backing.

Why this matters for carbon markets

Introduced in March 2023, the Green Claims Directive aimed to combat greenwashing by requiring companies to substantiate environmental claims with scientific evidence and third-party verification. For carbon markets, it was expected to clarify eligible use cases for VCM credits and provide EU-wide standards for carbon-related environmental claims.

The legislation was designed to address findings that over 50% of green claims in the EU were vague or misleading, with 40% lacking evidence. Without it, the claims regulatory landscape will remain fragmented and uncertain.

Abatable's angle

The collapse of the EU Green Claims Directive and the political infighting it has revealed create short-term uncertainty, but also strategic opportunities for carbon market participants – more on those below.

Immediate impacts on the VCM

• Carbon Removals and Carbon Farming (CRCF) demand: The Directive was expected to clarify voluntary carbon credit use cases, including future EU CRCF credits. Its withdrawal leaves regulatory uncertainty that could persist for years, potentially limiting CRCF demand to EU Emissions Trading System compliance applications.

• Fragmented claims standards: Without EU-wide rules, environmental claims regulation reverts to inconsistent national laws or voluntary guidance. Companies making carbon-related claims must navigate a patchwork of requirements across EU Member States. This complicates cross-border strategies and may deter businesses from making ambitious public statements on climate.

The EU's flip-flopping contrasts sharply with other jurisdictions, such as Canada and the UK. For global companies, this inconsistency requires flexible, jurisdiction-aware strategies that satisfy varying legal compliance while maintaining credibility.

Market opportunities emerge

In the absence of restrictive EU rules, companies may be more willing to make carbon credit claims, potentially driving demand for high-quality offsets and removals. The regulatory gap could paradoxically benefit the VCM if companies seek credible alternatives to demonstrate climate leadership.

Even if the Directive doesn’t return, the underlying need for credible environmental claims standards remains. If anything, it highlights the importance of industry-led approaches that balance ambition with practical implementation.

Companies should focus on building robust carbon strategies based on established standards while maintaining flexibility for evolving regulatory landscapes.  

Read the full story in our weekly update.

This is an edited version of a previous article in our weekly carbon market updates. This month we also covered:

- IC-VCM approves Ecosystem Restoration Standard, cookstove and adipic acid methodologies

- BeZero issues first portfolio rating, setting new standard for carbon credit portfolios

- Canada's carbon claims legislation provides clarity, risk and opportunity

- How Chile’s carbon tax is shaping regional carbon markets

- Brazil introduces REDD+ safeguards amid legal scrutiny and forest loss

- Zimbabwe launches national carbon registry, prompting the first transfer of credits from a voluntary to national registry

Chart of the month

ICAO's recently updated CORSIA demand forecast closely matches Abatable's CORSIA demand modelling, as we outline in our chart this month.

The International Civil Aviation Organization (ICAO)'s update represents the view of the ultimate regulatory authority on CORSIA, the offsetting scheme for international aviation emissions, while the International Air Transport Association (IATA)'s forecast, also displayed above, reflects the operational realities and industry intelligence of the airlines that will ultimately bear CORSIA compliance obligations.

Abatable's independent forecasting model reproduces ICAO's rules, eligibility criteria and conditions per phase, and includes all participating countries, designated airlines and routes covered by the scheme. It follows a top-down approach where historical emissions data from over 13,000 international flight routes and 650 airlines were captured and translated into three CORSIA demand scenarios over the scheme’s phases. 

Importantly, our forecast enables a granular view down to the individual airline – bridging the gap between global projections and airline-specific offsetting requirements under CORSIA. This is critical for market participants planning their carbon credit procurement strategies.  

Coming soon – keep an eye on our blog where we will outline more on the forecast comparisons and how our model works.

Our perspective

The World Bank's carbon pricing report demonstrates the untapped potential for carbon credits

By Coco Chernel, Abatable Research Associate and Alejandro Limón Portillo, Abatable Carbon Knowledge and Data Manager

 This month the World Bank released its annual State and Trends of Carbon Pricing report, which outlines a continued expansion of the planning and adoption of carbon taxes and emissions trading systems worldwide. The report outlines that carbon pricing instruments mobilised over $100bn in public revenues in 2024 alone, and now cover 28% of global greenhouse gas emissions. 

Carbon pricing coverage grew by four percentage points over the past year, primarily driven by five new schemes in middle-income countries like Brazil, India, and Turkey, all of which have planned emission trading schemes. In North America, subnational initiatives continue to lead progress, with the Californian and Quebec cap and trade schemes emerging as significant sources of demand for compliance credits. 

Overall, this demand is surging. The World Bank reports that compliance retirements tripled in 2024, now accounting for 25% of all retirements. Yet, Abatable estimates potential demand from existing compliance systems could reach 10 times that of the voluntary market. Existing pricing systems could drive up to 1.7 gigatonnes of credit demand, vastly outpacing the 172 million tonnes traded in the voluntary carbon market (VCM) in 2024.

But there is a gap: only 18 of the 80 carbon pricing mechanisms currently in place allow the use of credits for compliance. Carbon credits can offer a cost-effective compliance pathway for regulated entities, however usage limits vary depending on the specific scheme (offset uses in compliance mechanisms range from 4% up to 100% of the obligation).

The economics are clear. In 2024, compliance carbon prices in US state programmes ranged from $23.30 to $66.20 per tonne of CO2, while the average carbon credit traded at just $6.32 per tonne. If supply quality, standard alignment and regulatory clarity continue to improve, carbon credit use in compliance markets is likely to grow, a shift that could see demand from regulated markets rival or surpass voluntary demand.

However, key barriers remain:

• Integrity concerns persist, with scepticism lingering from voluntary market controversies.

• There are procurement complexities, whereby capacity building and credit sourcing may result in credits no longer offering the cheapest option.

• Standards are misaligning, as many jurisdictions reject global methodologies in favour of domestic methodologies.

If future frameworks allow voluntary credits, surplus supply in the VCM could help address shortfalls in compliance markets, but only if both markets maintain high integrity. 

This will create opportunities for project developers and credit suppliers, but only for those aligned with local eligibility criteria and jurisdictional requirements.

To navigate eligibility criteria and secure quality carbon credits, get in touch with our team: hello@abatable.com

Read the full take in our weekly carbon market update.

Abatable news

Abatable supports €100mn Key Carbon and InSoil deal to accelerate regenerative agriculture across Europe

Abatable has supported climate finance company InSoil and financier Key Carbon to enter into a €100mn agreement to expand regenerative agriculture across one million hectares of farmland and provide access to low-carbon financing for farmers across Europe. Key Carbon’s investment in InSoil is expected to enable the sequestration of over 35mn tonnes of greenhouse gas emissions through regenerative practices adopted by more than 3,000 farmers. 

The investment marks InSoil’s (formerly known as HeavyFinance) largest funding to date. It also represents one of the largest financial commitments to regenerative agriculture in Europe tied to the generation of carbon credits, supporting the transition to climate-resilient farming practices and the generation of high-quality carbon removals. 

Read more about the news here.

High stakes, higher integrity: Decoding the new era of carbon market maturity – Webinar replay now online

In 2025, the voluntary carbon market (VCM) is evolving fast – and many organisations, including corporate buyers, are struggling to keep up. Amid shifting standards, fluctuating prices, and increasing scrutiny, there is increasing pressure on the market to supply credits that match the demands of corporate buyers for higher integrity.

Our webinar, High stakes, higher integrity: Decoding the new era of carbon market maturity, is now available to access on our website. Watch Abatable and our expert panel explore the new standards of integrity in the market and what they mean for carbon credit buyers.

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About Abatable

Abatable is on a mission to enable all organisations to build a thriving future for climate, nature and people. We do this by developing the tools organisations need to confidently navigate carbon markets and find the right partners, understand market risk and amplify their planetary impact. Our solutions are enabled by technology, and powered by people, making us a trusted guide for organisations looking to take action within the complex and evolving carbon markets. Find out more at abatable.com.

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