The voluntary carbon market (VCM) prices credits based more on who is buying them than on how much good they do for the climate, according to new research from MIT Sloan School of Management—a finding that raises fundamental questions about whether the market is channeling money toward the most effective climate solutions.
The study, led by MIT Sloan principal research scientist Florian Berg and co-authors from VU Amsterdam, the Leibniz Institute for Financial Research SAFE, MIT, and the Tinbergen Institute, analyzed more than 7,200 real transactions made between 2018 and 2024, covering roughly 11% of the global secondary voluntary carbon market by dollar value.
The researchers examined what 1,200 companies across finance, manufacturing, energy, consumer goods, and transport paid for credits across 400 projects.
Price Swings From Cents To $100/Tonne
If carbon credits functioned like a commodity, one tonne of emissions reduced would carry the same price regardless of who was buying. Instead, the study found prices swinging from a few cents to more than $100 per tonne for credits representing the same volume of reductions. Buyer identity alone explained 62% of price variation—a figure without parallel in comparable financial markets such as corporate bonds.
The 20 largest buyers paid 16% to 23% less than the rest of the market. Financial services and consumer goods companies paid 9% to 22% more than industrial manufacturers. Buyers from wealthier countries consistently paid more.
Strikingly, companies with public climate commitments, including science-based targets, paid no more for higher-quality credits than companies without such pledges.
Relevant: New Abatable Report: Quality, Not Volume, To Define Carbon Markets In 2026
The most counterintuitive finding concerns project quality. Forest protection and clean cookstove projects, both rated poorly by independent assessors for their actual climate effectiveness, sold at two to four times the price of more reliable technologies such as waste management and industrial efficiency projects. The premium persisted even after investigative reporting exposed serious problems with forest protection credits.
“For example, super pollutants are traded for much less,” said Berg, “because the story is not as nice.”
The researchers argue the market would function better with publicly available price benchmarks, potentially through a requirement for participants to report transaction prices after a short delay.
“To really make the market function well, it’s very important that we create a mechanism to make it more transparent,” the study’s principal research scientist concluded.
Read more: Voluntary Carbon Market Sees Sharper Price Signals As Integrity Gap Widens, New Report Shows
