Understanding carbon credit procurement: spot, offtake and direct investment

Spot credits

Spot credits are the most established and widely understood form of carbon procurement. These are already-issued credits, available on the open market through exchanges, brokers, or direct relationships with project developers. They represent verified emissions reductions or removals that have already occurred.

For companies needing to meet immediate compliance or voluntary targets, spot credits are an attractive option. They are available on demand, easily transactable, and compatible with standard corporate accounting systems.

However, as more companies enter the carbon market, high-quality spot credits are becoming harder to find – and more expensive. Nature-based removal credits, especially those with co-benefits beyond carbon, now trade at a clear premium. According to MSCI, project type, quality rating and co-benefits are the main drivers of carbon credit pricing, with high-integrity removal credits among the most expensive segments. Sylvera’s Carbon Market Trends 2026 report found that the average global spot price for high-quality ARR credits rose from $14 to $26 per tCO₂e over the course of 2025.

Spot credits however don’t offer long-term price or supply security. Moreover, relying solely on spot purchases limits a buyer’s ability to shape outcomes, such as where and how a project is implemented – for instance, near their supply chain – and offers little influence, future planning or participation in the broader impact objectives and outcomes. For example, spot credit purchases offer limited opportunity to demonstrate strong engagement and partnerships with Indigenous, local and traditional communities. In a market where credibility matters, this can be a constraint.

“Spot credits are usually about offsetting carbon emissions that have already occurred,” said Ducos. “For many companies, they are useful for meeting annual reporting requirements, but are increasingly difficult and expensive when competing for limited high-integrity supply.”

Spot carbon credits are typically used by:

• Companies with near-term emissions targets and/or compliance obligations
• Businesses seeking flexibility and immediate procurement with a fast and simple transaction
• Organisations with limited internal resources for long-term procurement planning

They are well-suited for:

• Companies with conservative budgets seeking guaranteed volumes, today

Multi-year offtake agreements

Carbon offtake agreements are long-term contracts in which a buyer commits to purchasing a specific volume of future carbon credits, guaranteed to be delivered by a project developer, over a set timeframe – usually five to 15 years. They are often multi-year, covering several credit issuance moments. This approach provides companies that have significant unabatable emissions with predictable access to high-quality carbon removal credits, at an agreed premium price, helping to insulate them from market volatility, price fluctuations and potential supply shortages in the years to come.

Because offtakes are structured around future delivery, they provide stronger alignment with a company’s medium to long-term climate goals. Buyers can support projects that resonate with their brand values and ESG commitments, while planning for future reporting cycles.

​​The premium price of carbon credits secured through offtake agreements reflects the lower risk for buyers. Offtake credits typically come from projects with additional inventory safeguards, put in place by the project developer. These mechanisms are designed to reduce the risk of underdelivery, ensuring buyers receive the agreed volume of credits, but add to the cost of offtake credits.

While the buyer pays some upfront cost, most of the credit price is paid on delivery. Since most project developers lack the capital to carry out large-scale restoration over multiple years without early revenue, the offtake structure typically requires a third-party financier to fund the initial development costs. These financiers assume risk and expect a return from the carbon project which also contributes to the high cost of offtake credits, making them more expensive than spot or direct investment credits.

According to Axelle, “Offtake agreements are a useful tool for companies that want to plan ahead without taking on early-stage risk. They provide predictability – but at a price.” She added that Land Life has seen a clear uptick in demand for offtake agreements, particularly from corporates with significant decarbonisation targets, such as those in the energy, tech and manufacturing sectors.

Offtake agreements are best suited for companies with medium-term visibility on their climate targets and sustainability claims. They are often used by:

• Large corporates with forward-looking carbon strategies
• Businesses seeking predictable cost structures over several years
• Willing to pay a premium for a low-risk, guaranteed supply of future carbon credits
• Want to demonstrate climate leadership through early-stage engagement
• Seek stronger impact alignment and influence over project outcomes

They work well for:

• Buyers seeking greater transparency, traceability and the opportunity to align with the project's values, outcomes and co-benefits
• Securing future access to high-integrity carbon credits
• Expansion of investment portfolios beyond spot credits to manage risk
• Companies that value not only the carbon but the positive impact of nature restoration on the landscape and supply chains it supports

“Appetite has shifted towards a portfolio approach, purchasing credits from a range of projects at quite different price points. A recognition that spot purchases do not provide clear, long-term demand signals to early-stage developers, and a desire for price visibility and future access to removal capacity, has led to a greater number of offtake agreements which lock in purchase agreements for up to ten years.” – Green Finance Institute

Direct investment

This investment approach allows companies to directly fund early-stage project development and secure future carbon credits at a lower cost than offtake agreements, often negating the need for third-party financiers.

Direct investment, and its variation carbon streaming, involves committing capital to developing a project before credits are issued, in return for securing the rights to a projected volume of future credits, which are delivered as they are verified over time. Direct investment agreements are typically signed directly between the project developer and the buyer. The payment structure is typically upfront and milestone-based, centred around the reforestation project design, land preparation, planting and monitoring.

Unlike offtake agreements, direct investment projects do not offer volume guarantees. This means the amount of credits delivered over time may differ from initial projections. It could be higher or lower, which introduces some uncertainty but enables significantly better pricing. For example, for similar quality and other characteristics, offtake credits can be 30-40% more expensive.

The volume risk can be mitigated through strong project selection and reliable carbon modelling systems to forecast anticipated volume. For example, Land Life uses an advanced proprietary model, FastTrack, to provide reliable, site-specific carbon modelling during the initial site assessment and planning phases, reducing risk for the buyer.

Like the offtake model, the direct investment model must also factor in inherent nature-delivery risks, such as rainfall or fire. This risk can be mitigated through insurance that the buyer (rather than the developer) may wish to purchase.

Ultimately, the trade-off for accepting greater volume uncertainty and upfront payment via direct investment is the ability to lock prices at today’s levels and hedge against future price increases. As pricing of high-integrity carbon credits is expected to significantly increase, direct investment is an important cost mitigation strategy for organisations.

For buyers, both offtake and direct investment models offer an opportunity to participate more deeply in the climate solutions they want to see in the world, benefitting from a degree of strategic influence over project design and implementation, including input on impact metrics, desired biodiversity and community co-benefits, and location. By delivering high integrity credits over time, direct investment and offtake also provide buyers with new rather than older vintage credits which is common on the spot market.

For carbon project developers such as Land Life, offtake and direct investment unlock essential early-stage funding, particularly important for reforestation projects where the majority of restoration costs are incurred in the first few years.

“At Land Life, we see direct investment as a catalytic model for delivering real climate impact. It’s not just climate responsibility – it’s good business. It’s a win for nature, a win for communities, and a win for the companies securing and diversifying their future supply.” 

– Axelle Ducos, Land Life Chief Growth Officer

Direct investment is best suited for companies that:

• Seek long-term credit security at a high quality and a lower price than offtake agreements
• Are comfortable accepting a degree of volume delivery risk in exchange for lower, fixed pricing on projected credits
• Have the budget to invest upfront
• Are not able or willing to pay a premium price for guaranteed volumes
• Have long-term net-zero or beyond value chain mitigation targets
• Want to demonstrate climate leadership through early-stage engagement
• Seek stronger impact alignment and influence over project outcomes

They are particularly valuable when:

• Buyers seek greater transparency, traceability and the opportunity to align with the project's values, outcomes and co-benefits
• Companies value not only the carbon but the positive impact of nature restoration on the landscape and supply chains it supports
• Securing future access to high-integrity carbon credits

While the structures outlined here reflect common features of offtake and direct investment models, the specific terms of each agreement will vary. Individual contracts may differ based on project type, buyer requirements, delivery timelines, safeguards and risk-sharing mechanisms.

Portfolio thinking: why diversification of your carbon credit procurement matters

Companies typically start their carbon credit journey via the spot route, but as they gain experience, they expand to include direct investments and/or offtakes. Rather than choosing a single model, many leading companies are building carbon credit portfolios that balance risk, flexibility, and long-term impact:

This kind of diversification helps companies hedge against price shocks, ensure future supply, and demonstrate a credible, strategic approach to carbon procurement.

Final thoughts: from procurement to participation

The carbon market is shifting from passive purchasing to active participation. While spot credits remain a useful tool – particularly for near-term reporting needs – they are only one part of a well-rounded carbon procurement strategy. Companies that rely solely on the spot market risk losing access to the high-quality credits needed to maintain credibility, compliance, and climate ambition.

Diversifying procurement approaches allows companies to meet short-term obligations while preparing for long-term goals. Whether through spot purchases, offtake agreements or direct investments, each model offers unique advantages – and trade-offs – across pricing, influence and supply security.

Direct and offtake investments, in particular, enable companies to secure future credit supply and contribute directly to the scale-up of high-impact projects. As Axelle Ducos notes, they also support outcomes that “go far beyond carbon removal alone” – including biodiversity, ecosystem restoration and community resilience.

Ultimately, companies that take a portfolio approach are better positioned to navigate uncertainty, manage volume and pricing risk, and demonstrate credible climate leadership. This is not just about securing credits – it’s about building resilience, catalysing impact, and shaping the kind of future we want to create.