The North American forestry carbon market is a diverse and rapidly evolving landscape, encompassing both voluntary and compliance offset mechanisms. Significant advancements in both segments underscore the growing role of forestry-based carbon credits in achieving corporate and regulatory climate goals. This report provides a comprehensive assessment of supply and demand dynamics, regulatory developments, and emerging trends across North America’s forestry offset markets. By integrating data-driven insights, regulatory analyses, and qualitative perspectives from market participants, the report offers a forward-looking perspective on the region’s forestry carbon market, including projections for voluntary and compliance offsets through 2050 and 2040, respectively.
Voluntary Market Developments
Within the voluntary market, Improved Forest Management (IFM) projects have experienced substantial growth, with issuances increasing by an average of 77% annually since 2021. This growth reflects both the strong supply pipeline and the expected increase in demand for high-integrity forestry offsets. Notably, North American forestry offsets - dominated by IFM projects - command a price premium over global forestry credits, particularly those from REDD+ projects in the Global South. This price differential indicates a strong buyer preference for regionally sourced, high-quality forestry offsets that align with corporate sustainability strategies and evolving voluntary carbon market standards.
Retirements of North American IFM credits have also demonstrated robust growth, with over 4.5 million credits retired in 2024 alone, marking a 54% year-over-year increase. This trend highlights a growing corporate appetite for high-quality, jurisdictionally stable carbon credits. However, the market remains a buyer’s market, with issuances significantly outpacing retirements due to the long crediting lifetimes of forestry projects and the substantial volume of credits in the pipeline.
While IFM remains the dominant project type in North America - driven by well-established timber harvesting regimes and favorable regulatory conditions - Afforestation, Reforestation, and Revegetation (ARR) projects are gaining prominence. Despite representing a smaller share of issuances, ARR credits command a price premium, reflecting the increasing demand for verifiable carbon removals. This demand is further reinforced by evolving standards from initiatives such as the Integrity Council for the Voluntary Carbon Market (IC-VCM) and the Voluntary Carbon Markets Integrity Initiative (VCMI), which emphasize the importance of removals over avoidance-based credits.
When accounting for “effective” open volume (discounting older unusable vintages) and quarterly fluctuations in demand, the IFM Bank index stands at 8.3 years and ARR at 6.4 years of inventory. Furthermore, the Surplus/Shortage Index for each protocol is in the 3-4 range, i.e. the market is creating 3-4 times the amount it is currently using. Developers are banking on big steps up in demand through the rest of this decade.
Compliance Market Dynamics
The compliance segment of North America’s forestry carbon market is also undergoing significant transformation. Established forestry protocols, such as those under California’s Cap-and-Trade Program and British Columbia’s Offset Protocol, are expected to see a rise in retirements as regulatory changes take effect.
In particular, California’s offset usage limit increase in 2026 is anticipated to drive higher demand for compliance-grade offsets, while the launch of British Columbia’s Output-Based Pricing System (OBPS) introduces new opportunities for credit utilization.
Beyond these established programs, newer compliance mechanisms are emerging across North America.
Jurisdictions such as Washington, Alberta, the Canadian Federal OBPS, and Mexico are developing and refining forestry offset protocols, expanding the range of regulatory opportunities for project developers and credit buyers. Additionally, there is a growing trend of voluntary retirements of compliance offsets, as corporations seek to leverage regulatory-grade credits for enhanced credibility in their carbon neutrality commitments.
Supply and Demand Forecasts
Issuance forecasts for North American voluntary forestry projects highlight a continued expansion in supply, albeit with variations across project types. IFM credit issuances are projected to peak by the end of this decade, followed by a stable period before declining through the 2040s due to the shorter crediting timelines associated with these projects. ARR projects, on the other hand, are expected to see more gradual but sustained growth, with peak issuances occurring around 2038 before plateauing.
Total voluntary forestry credit issuances for the 2025 vintage are estimated to approach 20 million credits, with a sharp increase anticipated by 2028 as a significant portion of pipeline projects - particularly Mexican IFM projects - become operational. However, issuance growth is expected to slow as ARR projects reach full capacity, ultimately leading to a peak in overall voluntary forestry credit supply by the late 2030s. Post-2040, issuances from forecasted projected declines in these existing projects reach the end of their crediting periods.
We have not sought to model entirely new/unheard of projects within this edition.
Geographically, the United States continues to dominate North America’s voluntary forestry offset landscape, with over 60% of pipeline projects located within its borders. Mexico is emerging as a key player, driven by a growing number of projects, although these tend to be smaller in scale compared to those in the U.S. and Canada. Canada, while contributing a smaller share of total issuances, remains a significant player in both voluntary and compliance markets
Looking at the WCI CCO outlook, the CCO DEBs market displays systematic tightening with demand overtaking supply post-2029, leading to a rapid consumption of the open volume in the market and a decline in the bank. Non-DEBs (non-Direct Environmental Benefit offsets), on the other hand, maintain a larger and more persistent bank compared to CCO DEBs due to historical oversupply, weaker demand drivers, and limited future compliance retirements - particularly as Quebec’s Non-DEB demand is effectively exiting the program. However, crucially, both sub-markets, DEBs and Non-DEBs, are substantially tighter from a Bank Index tension perspective than the equivalent market in voluntary offsets. CCOs as a whole are becoming more of a Seller’s Market through the 2020s.
Market Risks and Considerations
Despite the promising outlook, several risks could impact the long-term viability of North American forestry offsets. Political and regulatory uncertainties remain a critical factor, particularly as governments refine compliance mechanisms and introduce new policies that may affect project eligibility and offset demand. Legal risks, including land tenure disputes and evolving carbon rights frameworks, also pose challenges for developers and investors.
Operational challenges, such as wildfire risks and land-use change pressures, further complicate project implementation and credit integrity. Additionally, market volatility - driven by fluctuations in offset pricing, corporate demand shifts, and evolving voluntary market standards - introduces uncertainties for project developers and investors.
Outlook and Strategic Implications
Looking ahead, the North American forestry carbon market is poised for continued expansion and evolution.
The increasing alignment of voluntary and compliance markets, coupled with growing demand for high integrity, jurisdictionally sourced offsets, presents substantial opportunities for developers, investors, and credit buyers. However, navigating this landscape requires a strategic approach that accounts for regulatory developments, evolving standards, and market risks.
The long-term trajectory of forestry offsets in North America will be shaped by both supply-side constraints such as land availability and project feasibility - and demand-side shifts driven by corporate climate commitments, regulatory changes, and emerging market mechanisms. With careful planning and proactive engagement with evolving policies and standards, North American forestry projects can play a pivotal role in the global transition to a low-carbon economy, delivering climate benefits while supporting sustainable forest management practices.
This report serves as a comprehensive resource for stakeholders across the forestry carbon market, synthesizing key market trends, regulatory developments, and forward-looking projections to provide a holistic view of North America’s forestry offset landscape.
Table of Contents
Executive Summary
