2025: When Climate Reality Caught Up With Carbon Markets

Reflections on the hottest La Niña year on record and what it really means for high-integrity carbon credits

In January 2026, the Copernicus Climate Change Service released its Global Climate Highlights for 2025. The conclusion was straightforward and unsettling.
2025 was the third-warmest year ever recorded globally, behind only 2024 and 2023. What makes this remarkable is how it happened: the year unfolded under neutral to weak La Niña conditions, which would normally act to cool the planet.

For me, this goes well beyond another climate statistic. It feels like a line being a moment where the physical reality of climate change finally caught up with the way we talk about markets, risk and mitigation. And that has direct implications for carbon markets, and for how we should think about high-integrity carbon credits going forward.

A quick word on La Niña and why it matters

La Niña is a natural climate phase linked to cooler-than-average sea surface temperatures in the tropical Pacific. In most years, it has a cooling effect on global temperatures. Historically, the warmest years on record tend to coincide with El Niño, not La Niña.

That 2025 still ranked among the hottest years ever observed, despite these conditions, matters. It tells us that human-driven warming is now strong enough to overwhelm natural climate variability.

The signal is clear

Copernicus’ ERA5 data shows that in 2025:

• Global average temperature reached around 14.97°C

• That is about 1.47°C above the 1850–1900 pre-industrial average

• The three-year average for 2023–2025 exceeded 1.5°C for the first time

This data means that even in years that should have been cooler, the system remains dangerously hot.

Impact of this warming

The impacts of this warming were visible almost everywhere:

• More than 90% of the Earth’s surface experienced above-average temperatures

• Around half of global land areas saw more days than average with strong heat stress

• Antarctica recorded its warmest year on record, while the Arctic saw its second warmest

• Global sea ice fell to a record low in February 2025

These aren’t abstract indicators. They translate directly into economic disruption, infrastructure stress, insurance losses and sovereign risk. This is no longer about distant scenarios in the future,  it’s about present conditions.

Why this matters for high-integrity carbon credits

Against this backdrop, the voluntary carbon market had a difficult year. Demand softened, prices fell for many credits, and scrutiny intensified, particularly around additionality, permanence and MRV (Monitoring, Reporting and Verification). Much of the public debate framed this as a failure of carbon offsets.

I don’t agree with that framing. What is failing is the assumption that emissions reductions alone, at their current pace, are sufficient.

As warming accelerates even during La Niña years, the gap between climate reality and decarbonisation pathways is widening. In that gap, high-integrity carbon credits become more relevant, not less , but only if they meet a much higher bar than in the past.

A noticeable shift toward the SDGs

One additional shift I noticed over the past year is a renewed interest in the SDGs, not as a reporting exercise, but as a way to frame climate action more holistically. As scrutiny around carbon claims increased, many organisations started looking beyond tonnes alone, asking how their climate strategies connect to broader development outcomes.

In practice, this often brought high-integrity carbon credits with clear SDG co-benefits back into focus, particularly where those impacts could be evidenced and communicated credibly.

What actually changed in the carbon credit market in 2025

From where I sit, three things genuinely shifted:

1. Quality overtook volume

Buyers became far more selective. The focus moved decisively toward high-integrity carbon credits with robust additionality, credible permanence and transparent MRV. As a result, genuinely high-quality supply began to look scarce rather than abundant, while weaker credits continued to lose relevance.

2. Nature-based mitigation regained strategic relevance

Nature-based solutions didn’t disappear, they matured. Interest returned to projects linked to ecosystem resilience, land use, water and biodiversity, but with credibility clearly taking precedence over scale. The question stopped being “how many tonnes” and became “which tonnes actually stand up to scrutiny”.

3. CORSIA is becoming an anchor

While broader voluntary demand remained uneven, the aviation offsetting scheme under the International Civil Aviation Organization provided one of the few clear, compliance-driven demand signals in 2025. Project developers increasingly aligned supply with CORSIA eligibility, and airlines moved from high-level commitments to practical preparation. In a sector with limited short-term abatement options, that anchoring effect mattered.

Governance caught up and corporates paused

Governance developments added another layer of discipline. The Integrity Council for the Voluntary Carbon Market (ICVCM) continued refining its Core Carbon Principles, reinforcing the direction of travel while extending near-term uncertainty.

At the same time, the Science Based Targets initiative (SBTi) released a second draft of its revised Corporate Net-Zero Standard. The message was consistent: direct decarbonisation remains central, but expectations around transparency, scope-specific targets and recognition of ongoing emissions are becoming more explicit.

Many corporates responded in a rational way. They didn’t walk away from climate ambition , they paused, waiting for clarity on how voluntary actions, including the use of high-integrity carbon credits, will ultimately be recognised and disclosed. That pause reflects discipline, not disengagement.

COP30: no shortcuts, but clearer direction

COP30 reinforced this broader picture. While Article 6 implementation moved forward incrementally, there was no political signal that carbon credits could substitute for real emissions reductions. The emphasis remained firmly on environmental integrity, host-country authorisation and transparency.

COP30 didn’t unlock a wave of new demand  but it narrowed the rules of the road. And in carbon markets, that matters.

The paradox of 2025

This is the paradox I take from 2025: “The year that exposed the limits of voluntary carbon markets is also the year that made high-integrity carbon credits unavoidable”.

The climate system is moving faster than policy and capital allocation. Until emissions trajectories bend decisively in the real economy, not just in reporting, high-integrity carbon credits remain a necessary complement to decarbonisation, not a substitute for it.

But the bar is now permanently higher.

Looking ahead

I don’t expect demand to disappear. I expect it to concentrate. Integrity will command a premium. MRV, data quality and registry readiness will increasingly determine what is bankable. Countries able to supply high-integrity mitigation units will gain strategic relevance.

Carbon markets are now operating in a world where every tenth of a degree matters. Carbon markets are entering a second life cycle: smaller, more disciplined, more expensive and far more consequential. From an Aurelaris perspective, this is not the end of carbon offsets  but the beginning of a more rigorous, evidence-driven and climate-relevant market built around high-integrity carbon credits.

Sources: Copernicus Climate Change Service (ERA5, Global Climate Highlights 2025); Integrity Council for the Voluntary Carbon Market (Core Carbon Principles); Science Based Targets initiative (Corporate Net-Zero Standard V2); International Civil Aviation Organization (CORSIA framework).

Disclaimer: The views expressed are personal, based on publicly available information, and should not be relied upon as investment, trading or professional advice.