2023 was a challenging year for carbon markets, as prices in various regulatory and voluntary carbon markets have been volatile and on a downward trajectory. However, we see interesting developments in some pockets of carbon markets, as 2024 has started with a bang for China's nascent carbon markets.


  • China’s efforts to improve standardization and credibility in its carbon markets should aid traction in its nascent markets. We are constructive on carbon pricing in China in the long term, but see near-term constraints due to limited coverage and weak visibility on industrial production growth.
  • Both China and Australia have reintroduced convergence between regulatory and voluntary carbon markets. This is positive for voluntary markets in the longer term. We expect further standardization and market consolidation to happen, and as such do not advocate direct investments into voluntary carbon market offsets but recommend sustainability-driven investors to focus instead on underlying projects, where offsets can be one of many revenue streams.
  • For now, we continue to favor established regulatory carbon markets that offer better liquidity and demand and supply visibility, including the EU, the UK, and regional US markets (California in particular). While we may see volatility in the near term due to changes in economic activity and political direction, we are constructive on higher carbon prices in the long term to support decarbonization objectives.
  • For more detail on carbon markets, please refer to our publication Sustainable investing in carbon markets
    (July 2023).

For more, visit the UBS Studios homepage and see Perspectives: Carbon market update, shipping decarbonization, WEF takeaways .