www.hestiya.com Quality vs Quantity How Buyers Are Rethinking Carbon Credit Portfolios
1.Executive summary The voluntary carbon market (VCM) is undergoing a fundamental shift. For much of the last decade, carbon credit procurement focused overwhelmingly on volume, how many tonnes of carbon dioxide equivalent (tCO ₂ e) could be purchased at the lowest possible cost. Carbon credits were often treated as interchangeable commodities, with price and availability driving decision-making. Today, that mindset is rapidly changing. Buyers are increasingly prioritizing quality over quantity¹, recognizing that not all carbon credits deliver the same climate impact, durability, or reputational resilience. As scrutiny around carbon claims intensifies, organizations are realizing that purchasing large volumes of low-cost credits may reduce short-term emissions on paper but introduce significant long-term risks. This report explores how and why organizations are rethinking carbon credit portfolios. It examines market data, buyer behavior, emerging risks, and evolving best practices. It also outlines how leading companies are moving from transactional carbon buying to portfolio- based, risk-aware strategies that emphasize integrity, transparency, and long-term value. , 1.
Table of Content 1. Executive summary 2. The Early Phase of the Voluntary Carbon Market: Quantity First 3. Market Reality Check: Why Quantity Alone No Longer Works 4. Data Signals: A Shift Toward Quality 5. Why “Quality” Means Different Things to Different Buyers 6. The Rise of Portfolio Thinking 7. The Cost Question: Is Quality Affordable? 8. Why Registries Alone Are No Longer Enough 9. What Leading Buyers Are Doing Differently 10. How Hestiya Helps Buyers Navigate the Shift 11. Conclusion: From Quantity to Credibility 2.
2. The Early Phase of the Voluntary Carbon Market: Quantity First In its early growth phase, the voluntary carbon market was shaped by a simple equation: More tonnes = more impact. Corporate buyers, particularly those in the early stages of climate action, focused on achieving rapid progress by purchasing large volumes of inexpensive credits. This approach was driven by several factors, including limited internal decarbonization options, pressure to demonstrate immediate action, and a lack 3 of widely accepted guidance on credit quality. Typical buyer behavior included: Ÿ Purchasing large volumes of low-cost credits to offset annual emissions Ÿ Using carbon offsets to make broad carbon- neutral or net-zero claims Ÿ Treating credits as a short-term compliance or reputational tool rather than a strategic investment Market infrastructure reinforced this behavior. Carbon registries primarily listed credits based on volume, vintage, project type, and price. Methodologies were treated as binary signals of acceptability: if a project followed an approved methodology and credits were issued by a recognized registry, they were generally 4 considered “good enough.” This approach enabled the voluntary carbon market to scale rapidly. It unlocked finance for climate projects and allowed thousands of companies to participate in climate action. However, it also planted the seeds for today’s credibility challenges by masking significant 5,6 variation in project quality and climate impact. 3.
3. Market Reality Check: Why Quantity Alone No Longer Works Over the past few years, multiple forces have converged to challenge volume-first carbon buying. 2.1 Scrutiny from Media, Regulators, and Civil Society Investigative journalism, academic research, and civil society organizations have increasingly scrutinized the integrity of carbon credits. Studies and reports have raised concerns around: Ÿ Over-crediting in certain project types, particularly avoidance-based projects Ÿ Weak additionality assumptions, where projects may have occurred without carbon finance Ÿ Permanence risks, especially in nature-based solutions vulnerable to fire, disease, or land-use change As a result, carbon credits are no longer treated as neutral commodities. Each purchase is now subject to interpretation and critique, with companies expected to justify not only that they bought credits, but which 7,8 credits they chose and why. 2.2 Investor and Board-Level Attention Carbon strategies have moved beyond sustainability teams and into: Ÿ Boardrooms Ÿ Audit and risk committees Ÿ Investor communications and disclosures Investors increasingly view carbon credits as a potential source of financial, regulatory, and reputational risk. This has raised expectations around governance, documentation, and decision-making. Organizations are now under pressure to demonstrate that carbon credit purchases are defensible, deliberate, and aligned with long-term climate strategies.⁹ 2.3 Science-Based Target Alignment Guidance from climate bodies and standard-setters emphasizes that carbon credits should complement, not replace , internal emissions reductions. This has forced buyers to think more carefully about: Ÿ The role of credits in their overall decarbonization pathway Ÿ Whether credits support credible long-term climate outcomes Ÿ How credits align with interim targets versus long- term net-zero goals As a result, credits are increasingly viewed as a strategic tool rather than a blanket solution. 4.
4. Data Signals: A Shift Toward Quality Market data strongly supports the narrative that buyers are prioritizing quality. 3.1 Market Value vs Volume According to Ecosystem Marketplace’s State of the Voluntary Carbon Markets (SOVCM) reports: Ÿ Total traded volumes have declined significantly since 2022 Ÿ Market value has not fallen proportionally This divergence indicates that buyers are purchasing fewer credits at higher average prices, signaling a clear 12,13 move toward higher-quality units. 3.2 Premiums for Carbon Removal Credits One of the clearest signals of quality preference is pricing. Carbon removal credits, including afforestation, reforestation, biochar, and direct air capture (DAC), command significant premiums over avoidance and reduction credits. In 2024, removal credits traded at several hundred percent higher prices than average 11-12 reduction credits. Year Traded Volume (MtCO e) Market Value (USD bn) Implied Avg Price (USD/t) Market Signal 2022 High Peak Low–Moderate Volume-led buying 2023 Declining Moderate decline Rising Early quality shift 2024 Significantly lower Relatively resilient High Quality-first procurement 400 350 300 250 200 150 100 50 0 Removal Credit Price Premiums vs Reduction Credits 2023 2024 Price Premium Percentage (%) 5.
Buyers are willing to pay more for: Ÿ Stronger additionality Ÿ Longer-term carbon storage Ÿ Lower reputational and invalidation risk This pricing dynamic reflects a growing recognition that durability and credibility matter as much as , volume. 3.3 Portfolio Concentration Is Declining Buyers are also diversifying: Ÿ Across geographies Ÿ Across project types Ÿ Across methodologies 6. Illustrative Buyer Carbon Credit Portfolio Mix (2024) 45% 25% 5% 25% Nature-based avoidance & reduction Technology-based removals Nature-based removals Energy & industrial reductions This mirrors financial portfolio theory, where diversification reduces exposure to systemic risks. Organizations are increasingly aware that concentration in a single project type or geography 1-5 can amplify climate, political, and reputational risks.
5. Why “Quality” Means Different Things to Different Buyers 7. One challenge in the quality-versus-quantity debate is that quality is not a single attribute. Leading buyers evaluate carbon credits across multiple dimensions: Key dimensions include additionality, permanence, leakage, measurement and verification rigor, governance safeguards, and claims alignment. Importantly, no single registry field captures all of these dimensions simultaneously. This complexity explains why buyers are moving beyond registry-only evaluation and adopting more nuanced assessment frameworks. Quality Dimension What It Means Why It Matters to Buyers Risk if Weak Additionality The emissions reduction or removal would not have occurred without carbon Finance Ensures the credit represents a real climate benefit Credits deliver no incremental impact Permanence / Durability How long the carbon benefit lasts (especially for removals) Buyers seek long-term climate impact, not temporary offsets Reversal risk (e.g., forest loss, leakage) Measurement, Reporting & Verification (MRV) Accuracy and robustness of carbon accounting and third-party verification Builds trust and defensibility of claims Over-crediting, inflated impact Methodology Integrity Strength and conservativeness of the underlying methodology Reduces uncertainty and reputational exposure Methodologies may be challenged or revised Leakage Control Ensures emissions are not simply displaced elsewhere Protects the net climate benefit Net emissions reductions may be overstated Vintage & Issuance Timing How recent the credit is and when reductions occurred Recent vintages better reflect current climate action Older credits may be less credible Registry & Transparency Availability of public data, documentation, and audit trails Enables scrutiny and stakeholder confidence Limited transparency raises trust concerns Co-benefits Social, biodiversity, or community impacts beyond carbon Supports ESG, SDG, and stakeholder narratives Missed opportunity for broade
6. The Rise of Portfolio Thinking 8. 5.1 From Purchases to Portfolios Early carbon buyers often made one-off or annual purchases. Today, leading organizations manage carbon credit portfolios over multiple years. A portfolio approach considers: Ÿ Risk distribution Ÿ Temporal alignment with net-zero pathways Ÿ Durability of claims over time Ÿ Exposure to future scrutiny This represents a fundamental shift: carbon credits are now treated more like strategic assets than consumable 3,4 offsets. 5.2 Balancing Quantity and Quality Importantly, prioritizing quality does not mean abandoning quantity altogether. Instead, buyers are: Ÿ Purchasing fewer credits overall Ÿ Being selective about where volume is appropriate Ÿ Reserving the highest-quality credits for the most sensitive claims For example: Ÿ Interim claims may rely on a mix of reduction and removal credits Ÿ Long-term net-zero claims increasingly depend on removals This nuanced approach allows buyers to balance affordability, availability, and credibility.
7. The Cost Question: Is Quality Affordable? 9. A common concern is whether prioritizing quality makes carbon strategies prohibitively expensive. 6.1 Total Cost of Ownership Forward-looking buyers are reframing cost in terms of total cost of ownership, which includes: Ÿ Initial purchase price Ÿ Risk of future invalidation Ÿ Cost of reputational damage Ÿ Potential need to re-purchase credits Viewed through this lens, low-cost, low-quality credits may 6 be more expensive in the long run. 6.2 Budget Reallocation, Not Budget Explosion Rather than increasing overall spend, many organizations are: Ÿ Buying fewer credits Ÿ Redirecting budgets toward higher-integrity options Ÿ Combining credit purchases with internal abatement investments This reflects a more mature and disciplined climate finance strategy.
8. Why Registries Alone Are No Longer Enough 9. What Leading Buyers Are Doing Differently 10. Registries remain essential infrastructure. They prevent double counting, track ownership, and enforce methodological standards. However, they were not designed to: Ÿ Score project risk Ÿ Compare quality across projects Ÿ Assess suitability for specific buyer claims 4,5 As buyers adopt quality-first strategies, they increasingly require interpretation layers on top of registry data. High-integrity buyers tend to: Ÿ Define internal quality criteria before engaging suppliers Ÿ Evaluate projects contextually, not just methodologically Ÿ Diversify portfolios across project types and geographies Ÿ Align purchases with claims strategy, not marketing goals Ÿ Document decision-making in anticipation of future scrutiny Carbon buying is evolving from procurement into a governance-led process.
As buyers move from quantity-driven purchases to quality-led portfolios, the primary challenge is no longer access, it is interpretation. Hestiya is designed to support buyers in this new phase of the market by turning registry data into decision-ready insight. Turning Registry Data into Buyer Insight Hestiya helps buyers move beyond surface-level registry fields by interpreting projects through a quality, risk, and strategy lens, enabling meaningful differentiation 7 between credits that appear similar on paper. Portfolio-Level Decision Support Hestiya supports portfolio construction by helping buyers: Ÿ Compare credits across methodologies, geographies, and project types Ÿ Identify concentration risks Ÿ Balance near-term and long-term credit strategies Alignment with Climate and Claims Strategy Hestiya helps ensure credits align with: Ÿ Internal abatement pathways Ÿ Interim targets and net-zero goals Ÿ Disclosure and reputational expectations By structuring complex information into buyer-relevant insights, Hestiya enables organizations to move from transactional carbon buying to intentional, defensible climate action.8 10. How Hestiya Helps Buyers Navigate the Shift 11.
The voluntary carbon market is maturing. The question facing buyers is no longer “ How many credits can we buy? ” but rather: “Which credits will still stand up to scrutiny tomorrow?” Quality-first carbon portfolios reflect a deeper understanding of climate responsibility. They recognize that credibility, durability, and alignment matter more than headline numbers. In this new phase of the market: Ÿ Quantity enables scale Ÿ Quality enables trust And trust, increasingly, is the scarcest resource of all. 11. Conclusion: From Quantity to Credibility 12. References: 1. Integrity Council for the Voluntary Carbon Market (ICVCM). Core Carbon Principles. ICVCM, 2023. 2. Ecosystem Marketplace. State of the Voluntary Carbon Markets. Ecosystem Marketplace, multiple editions, 2022–2025. 3. World Bank. State and Trends of Carbon Pricing. World Bank Group, latest edition. 4. University of Cambridge. Assessing Over-Crediting Risks in Voluntary Carbon Markets. University of Cambridge, Centre for Climate Change Mitigation Research, recent analyses. 5. BlackRock. Climate Risk and the Voluntary Carbon Market. BlackRock Investment Institute, latest research edition. 6. MSCI ESG Research. Carbon Credits, Corporate Claims, and Climate Risk. MSCI Inc., latest edition. 7. Science Based Targets initiative (SBTi). Net-Zero Standard. SBTi, 2021. 8. Ecosystem Marketplace. State of the Voluntary Carbon Markets 2023–2025. Ecosystem Marketplace, 2023–2025. 9. Ecosystem Marketplace. Carbon Removal Markets: Buyers, Suppliers, and Prices. Ecosystem Marketplace, latest edition. 10. Organisation for Economic Co-operation and Development (OECD). Climate Risk and Portfolio Diversification. OECD Publishing, recent edition. 11. Carbon Direct. Carbon Credit Quality Criteria. Carbon Direct, latest edition. 12. Voluntary Carbon Markets Integrity Initiative (VCMI). Claims Code of Practice. VCMI, 2023. 13. Intergovernmental Panel on Climate Change (IPCC). AR6 Working Group III: Mitigation of Climate Change. Cambridge University Press, 2022.