Global Environmental Markets Update - December 2025

New Zealand carbon market

• Confidence in the New Zealand ETS deteriorated further in December, with prices weighed down by persistent policy uncertainty despite tightening auction supply. NZUs traded consistently below the auction reserve, spending most of the month in the low NZ$40s before falling to a low near NZ$36.85 and closing at NZ$39.95.
• The final auction of 2025 failed to clear, removing a combined 13 million units from future supply. While mechanically tightening the cap, the outcome did little to lift sentiment, with secondary prices remaining well below the auction floor. Policy developments dominated market psychology, including the formal decoupling of ETS settings from New Zealand’s NDC and confirmation that offshore mitigation would not be budgeted under the Paris Agreement.
• Further pressure followed the government’s rejection of Climate Change Commission advice and revisions to long-term methane targets, reinforcing expectations that emissions will remain below the ETS cap for much of the next decade. Trading activity persisted but was largely speculative, with compliance buyers staying on the sidelines. By mid-December, NZUs were trading near levels last seen in 2021, reflecting a sharp reversal in expectations for tightening supply and stronger prices.

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For in-depth data, analysis and commentary on international carbon markets, including macro trends, other regional markets, CORSIA and Article 6 markets, explore our Carbon Intelligence Package.

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Singapore market

• Singapore continued to progress its work on Article 6 implementation throughout December. It signed a joint Memorandum of Understanding (MoU) with the governments of Switzerland and Brazil to accelerate climate action and advance cooperation under Article 6.
• Proposed areas of activity under the MoU focus on the creation of Internationally Transferred Mitigation Outcomes (ITMOs) in Brazil, facilitated by investments from Singapore and Switzerland alongside private sector engagement.
• The signing takes Singapore to a total of 27 countries with which it has signed MoUs, extending its lead on Article 6 implementation.
• Further progress was also made on Singapore’s partnership with Vietnam under Article 6, with the publication of pre-approved methodologies in December. Listed registries included the Gold Standard, Verified Carbon Standard, American Carbon Registry, Global Carbon Council and Architecture for REDD+ Transactions.

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For in-depth data, analysis and commentary on international carbon markets, including macro trends, other regional markets, CORSIA and Article 6 markets, explore our Carbon Intelligence Package.

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Japan market

• The mandatory phase of Japan’s GX-ETS is scheduled to commence in April 2026 and will cover approximately 60% of national emissions. In December, the Ministry of Economy, Trade and Industry (METI) convened a further meeting on the core design of the scheme, confirming the introduction of an upper and lower price limit for FY2026 emissions allowances. The price corridor is intended to improve carbon price predictability, support investment in decarbonisation, and act as a cost-containment 'safety net' during periods of market volatility.
• Under the lower price mechanism, should market prices remain below the floor for a sustained period, the government may intervene through reverse auctions to tighten the supply-demand balance. From FY33, a floor price will also apply to government allowance auctions.
• By FY30, METI expects the floor to rise to JPY 1,913/tCO₂e (AUD 18.21) and the ceiling to JPY 4,840/tCO₂e (AUD 46.08), although actual levels will be determined annually from FY27. The announcement of the price corridor provides covered entities with greater clarity on future compliance costs and supports strategic planning.

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For in-depth data, analysis and commentary on international carbon markets, including macro trends, other regional markets, CORSIA and Article 6 markets, explore our Carbon Intelligence Package.

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Voluntary carbon market

• December underscored the continued weakness in aggregate voluntary carbon demand, even as higher-integrity segments showed resilience. Expected year-end retirement strength failed to materialise, with Verra and Gold Standard retirements totalling just 9.7 million credits, well below historical norms. The absence of large energy and oil buyers contributed to subdued liquidity and generally sideways-to-lower pricing in commoditised products.
• At the project level, quality differentiation remained pronounced. Higher-rated nature-based credits, particularly afforestation, reforestation and revegetation, continued to outperform, extending gains seen earlier in the year. In contrast, lower-rated REDD+ credits remained under pressure, highlighting ongoing market bifurcation.
• Integrity and standards developments remained central to sentiment. CCP-aligned issuance expanded only gradually, while Verra’s fast-track verification and reviews of legacy methodologies signalled rising transition costs for developers. Ongoing debate around SBTi’s draft Corporate Net-Zero Standard and unresolved Article 6 authorisation frameworks added further uncertainty, particularly for credits with potential links to future compliance markets.

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For in-depth data, analysis and commentary on international carbon markets, including macro trends, other regional markets, CORSIA and Article 6 markets, explore our Carbon Intelligence Package.

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CORSIA market

• December saw further new issuance of CORSIA Phase 1 eligible credits, with cookstoves manufacturer and project developer, Burn, securing eligibility labelling for 180,867 of its credits from a project in Tanzania. These joined 1.5 million credits issued in November to Hestian for its Malawi Biomass Energy Conservation Programme. Collectively, the two projects represent the only new supply beyond the first project to attain eligibility, the jurisdictional REDD+ programme in Guyana under the ART TREES standard.
• Additional issuance is expected in the coming months as a significant barrier to crediting under the Verified Carbon Standard reached a resolution in December, with Verra publishing its first list of approved insurers. Eligible insurers largely mirrored those approved by Gold Standard, with insurance intermediary Howden conducting the independent assessment of insurance products on behalf of both standards. Newly eligible providers included CFC Underwriting Limited; Oka, The Carbon Insurance Company; and Artio Carbon Limited, all also eligible under Gold Standard.

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For in-depth data, analysis and commentary on international carbon markets, including macro trends, other regional markets, CORSIA and Article 6 markets, explore our Carbon Intelligence Package.

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Australia biodiversity market

• The EPBC Act reform package, which passed through federal Parliament in November, will see changes to forest timber harvesting, land clearing, and could have implications to certain ACCU project types.
• Prior to the EPBC Act reforms, Australia’s environmental laws allowed land clearing and native forest logging to proceed without environmental assessment if the land had historically been subject to clearing or logging activities.
• As per the updated EPBC Act, from 1 July 2027, these exemptions will be removed if the project could have a significant impact on a matter of national environmental significance and the vegetation has not been cleared for 15 years or more.

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For monthly deep dives on Australian and global biodiversity markets, explore our Carbon Intelligence Package.

Sustainable Aviation Fuel credits

• SAF markets saw mixed progress in December, with demand-side activity strengthening while supply-side constraints persisted. Retirements of credits on the Sustainable Aviation Buyers Alliance rose sharply, reaching a record monthly high and signalling growing buyer engagement.
• Airline participation also continued to build. Cathay Pacific and Neste announced a SAF supply arrangement covering Cathay’s operations across Europe, the United States and Asia-Pacific. While volumes were not disclosed, Cathay has set a target to source 10% of its fuel from SAF by 2030.
• However, analysis from IATA points to ongoing supply-side challenges. While global SAF output increased materially in 2025, growth is expected to slow in 2026, with SAF volumes still representing a small share of total aviation fuel consumption. Cost pressures and uneven policy support continue to weigh on the pace of scale-up.

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For in-depth data, analysis and commentary on international carbon markets, including macro trends, other regional markets, CORSIA and Article 6 markets, explore our Carbon Intelligence Package.

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