MIT Sloan study: Carbon credit prices driven more by buyer identity than climate impact

A new study from MIT Sloan School of Management found that who buys a carbon credit matters more to its price than what the credit actually does for the climate. Researchers examined over 7,200 real transactions in the voluntary carbon market between 2018 and 2024. Buyer identity alone explained 62% of price variation, with prices ranging from a few cents to over $100 per ton for the same amount of emissions reductions. The study also found that projects with the worst track records for delivering real emission reductions were often the most expensive. Forest protection and cleaner cooking stove projects, rated poorly by independent assessors, sold for two to four times the price of more reliable technologies like waste management or industrial efficiency projects. The 20 biggest buyers got 16%-23% discounts, while financial and consumer goods companies paid 9%-22% more than industrial manufacturers. The findings suggest the voluntary carbon market lacks transparency and doesn't give buyers a clear sense of what carbon reductions are worth. Companies that made public climate pledges did not pay more for credits than companies without such commitments, countering expectations that ambitious climate goals would drive premium pricing for higher quality credits.