On November 13, 2025, RBC Capital Markets, in partnership with ClearBlue Markets, hosted its third annual Carbon Markets Conference. The world has changed substantially since last year’s event, impacting carbon markets, climate action and economies at large. The objective of this year’s conference was to help our clients understand the risks and opportunities these changes present to the carbon markets.
Here are the top takeaways from the conference:
1. Energy security and economic resilience are reshaping climate action
We opened this year’s conference with a level-set on the current state of the energy transition and a discussion on COP30. Our speakers noted that geopolitical instability and broader economic affordability concerns have caused climate action to fall in priority for many governments, corporates and individuals. Yet while it may seem like progress has stalled or even reversed, 2025 is set to be a record year for global investment in the energy transition, with investments projected to reach $2.2 trillion – double that of fossil fuels1 .
Reframing climate action through the lens of energy security, geopolitical risk and economic resilience is both powerful and pragmatic. It can help reduce polarization and focus attention on solutions that are ready to scale. This will benefit carbon markets, which play an essential role in both addressing climate change and supporting economic competitiveness.
2. Not so voluntary: the convergence of voluntary and compliance carbon markets
A growing theme in recent years is the shifting of voluntary carbon markets towards compliance carbon markets. The Paris Agreement Crediting Mechanism (PACM) and Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) are primary examples of this, both of which saw a growing number of transactions this year2,3. In these programs, market participants will primarily utilize project-based carbon credits that have largely been generated through voluntary market registries and methodologies. The result of this is increased sources of liquidity for a market that has struggled to grow over the past few years due to credibility concerns. Speakers highlighted that these issues have largely been resolved through enhanced methodologies, stronger measurement, reporting and verification methods, carbon project ratings firms and oversight bodies like the Integrity Council for Voluntary Carbon Markets (ICVCM).
Another interesting development is that standard-setting bodies such as Science-Based Targets Initiative (SBTi) are proposing a mandatory use of carbon credits or climate investments within the next 10 years4. There has also been broad government support for this practice through the Coalition to Grow Carbon Markets which was founded by the UK, Singapore and Kenya governments and now counts 11 countries as members including Canada and France. The speakers expect this convergence of voluntary and compliance carbon markets to accelerate in 2026.
3. CBAM catalyzes global carbon market growth
The compliance markets have continued to grow globally, driven in part by Europe’s Carbon Border Adjustment Mechanism (CBAM). Speakers shared that as of 2025, carbon pricing covers 28% of global emissions5. This is poised to expand as governments respond to the EU CBAM as the program enters the definitive phase in 2026. The EU CBAM aims to level the playing field for European industry by applying the EU Emissions Trading System (ETS) allowance price to imports of carbon-intensive goods in sectors such as cement, electricity, fertilizers, iron and steel, aluminum, and hydrogen. Carbon pricing in the exporting jurisdiction can reduce the EU CBAM obligation, which has encouraged emerging ETS programs in Brazil, Turkiye, Japan and India. China is also transitioning its ETS from rate-based to an absolute cap, mirroring the EU ETS.
With climate ambition meeting affordability concerns in 2025, speakers referred to a broad government recognition that carbon markets, widely seen as the most cost effective means of reducing emissions6, can play a key role in the transition to a low carbon economy. The EU reached a deal for an ambitious 2040 GHG emissions target, with the ETS central to the long-term strategy. In California, the Legislature voted to extend the state’s ETS through 2045 and renamed it “Cap-and-Invest” to emphasize public benefits.
4. Carbon markets are central to Canada’s climate strategy and economic competitiveness
Speakers indicated that the new Liberal government under Prime Minister Mark Carney has prioritized fixing Canada’s fragmented carbon markets. The federal fuel charge was removed on day one of the Carney administration, taking the consumer-facing carbon tax off the table, alongside a pledge to strengthen and harmonize the provincial industrial carbon pricing schemes. Although the headline federal carbon price is CAD 95 in 2025, pricing in the provinces varies and can be much lower, with pricing in the Alberta Technology Innovation and Emissions Reduction (TIER) program falling below CAD 207.
While carbon markets in Canada have helped drive investment, more stability is needed for them to reach their potential and send a robust, long-term carbon price signal. A robust carbon pricing framework will also be required to grow trade relationships with the EU and Asia, particularly in light of the EU CBAM taking effect in 2026.
The speakers noted the federal government’s commitment to strengthening the federal benchmark and enforcing the federal backstop for carbon pricing was reaffirmed in Canada’s Climate Competitiveness Strategy, released as part of Budget 2025. This is further reinforced with the Canada-Alberta MOU, where industrial carbon pricing is set to become the primary policy for reducing emissions in Canada. Additional work will begin with the 2026 federal equivalency review where the federal government will provide further clarity on the mechanisms to harmonize and strengthen the industrial carbon pricing system8. Carbon contracts for difference could play a role in shoring up the price signal for investment. Speakers suggested a price floor as being a near-term step that could support the market.
5. Despite demand uncertainty, carbon removals may face a supply crunch
Over the past few years, a prevailing narrative is that the voluntary carbon markets are oversupplied, including engineered carbon dioxide removal (CDR) credits, a subset of the broader market. Speakers noted that while this perception has merit, engineered CDR credits remain in very high demand. For the carbon removal market to reach its lofty growth targets, there exists a near- and medium-term supply shortage. Speakers shared how this demand-supply imbalance could quickly come to the forefront as new requirements from SBTi and other standard setting bodies come into effect. Speakers emphasized the importance of early market participation for corporate buyers, to avoid being unprepared when new requirements take effect and competition for credits intensifies.
6. Back to basics: successful projects support the communities in which they operate
As mentioned, speakers agreed that credibility issues for nature-based climate solutions and other types of carbon projects have largely been addressed (or are being addressed) and the narrative around carbon credits is once again shifting to how they can be an effective tool for near-term climate impact. The next frontier will be establishing new frameworks and mechanisms that accurately and transparently track and measure the co-benefits of a given carbon project, be it meaningful community, biodiversity or climate adaptation benefits. This would allow carbon projects to highlight their value in new ways and differentiate in a competitive market. Furthermore, effectively showcasing these benefits helps support the use of carbon credits as a key tool by governments and corporates in their sustainability strategies.
RBC’s capabilities
To help navigate the rapidly evolving carbon markets, RBC Capital Markets offers extensive expertise and full capabilities in emissions trading across both compliance and voluntary carbon markets. The Environmental Markets Solutions Group partners with RBC Capital Markets’ Environmental Commodities desk, established in 2008, to offer bespoke solutions to clients looking to operationalize their net-zero targets through carbon and renewable energy solutions.
In April 2023, RBC announced a strategic investment and partnership with ClearBlue Markets, an award-winning carbon markets advisory firm. ClearBlue Markets provides carbon markets services to hundreds of clients worldwide, helping them optimize their strategies for compliance requirements and voluntary net zero ambitions through its deep advisory expertise and AI enabled technology.
1. https://www.iea.org/reports/world-energy-investment-2025/executive-summary
2. https://www.iata.org/en/programs/sustainability/ecohub/ace/#tab-4
3. https://carbon-pulse.com/article-6-portal/
4. https://files.sciencebasedtargets.org/production/files/CNZS-V2-Second-Consultation-Draft.pdf?dm=1762285041
5. https://www.worldbank.org/en/publication/state-and-trends-of-carbon-pricing
6. https://unfccc.int/about-us/regional-collaboration-centres/the-ciaca/about-carbon-pricing#What-are-the-benefits-of-carbon-pricing-
7. Source: ICE Alberta TIER 2025 Forward Contract
8. https://budget.canada.ca/2025/report-rapport/pdf/budget-2025.pdf
