We remain a long way from solving the climate crisis.
According to the IPCC’s Sixth Assessment Report, the world is less than a decade away from surpassing the 1.5 °C threshold, with every additional degree of warming intensifying extreme weather, costs, and social impacts.
At the same time, our management of resources is deteriorating. The Circularity Gap Report shows global circularity has fallen to 6.9%, meaning over 90% of materials extracted each year are not reused. While recycling is increasing, total consumption continues to grow.
Climate and resource use are closely linked - nearly everything produced, transported, and consumed generates emissions. Circularity improvements alone could deliver up to 85% of the emission reductions needed to meet the Paris goals, most of which is not accounted for in existing climate models.
Introducing the Circularity sector
Recognising the scale of this challenge, AlliedOffsets are introducing Circularity as a new sector as part of their Carbon Market Dashboard - highlighting projects focused on reducing emissions through resource recovery, recycling, and waste prevention.
While circularity is a new sector in the AlliedOffsets database, it relates closely with existing activity in the waste sector and methane, so we’ve taken a deeper look at what the data reveals across these areas.
Why the waste sector matters for climate and emissions
Methane from decomposing organic waste is a greenhouse gas over 80 times more potent than CO2 on a 20-year basis and accounts for roughly one third of current global warming. Landfills contribute about a quarter of global methane emissions, making waste management a critical mitigation lever.
Reducing waste brings dual benefits: it cuts methane while limiting the need for virgin material production. Each item diverted from landfill prevents both decomposition emissions and the upstream footprint of its replacement.
Improving waste treatment, sorting, and recycling strengthens material efficiency and directly supports global climate targets.
Waste sector overview
Waste sector projects by subtype and year
Project start year by subtype
While not all waste-related carbon credit generation projects are circular in nature, they do reflect an important appetite for funding improved waste treatment and methane emissions reduction, functioning as a natural predecessor to circular projects that in fact add significantly more value to global cooling and waste reduction.
The number of waste sector projects increased steadily through the 2000s, peaking in 2012 with close to 500 new projects started. This period marked the height of activity in the sector.
Following this peak, new project development declined sharply, reflecting the wider downturn in global carbon markets after 2012. From 2018 onwards, the data shows a gradual recovery, with project activity increasing again across multiple subtypes. While this recent growth has not reached previous peak levels, it indicates good momentum in waste sector mitigation.
Over the past five years, the largest share of new projects has come from organic waste and flaring and use of landfill gas. These categories account for the majority of recent activity, while waste to energy and recycling/material recovery have maintained steady but smaller contributions.
This shift in project activity is reflected in recent market pricing trends, with the waste sector showing moderate fluctuations over the past year.
Waste sector price trends
AlliedOffsets Waste Index
Prices within the waste sector have shown moderate volatility over the past 18 months. After starting at high levels towards the end of 2023, the waste index declined quickly and stabilised at $5.0/tCO2e for most of the year. Towards the end of 2024, prices began to rise, reaching above long term average as market sentiment slowly started to improve.
Since early 2025, however, the index has followed a downward trajectory, with prices trending toward $4.5/tCO2e year to date. When compared to the AO500 benchmark, which currently sits at $4.9/tCO2e, waste sector prices remain slightly lower than average. Over the past year, the AO500 index has risen steadily from $4.0/tCO2e in August 2024, while the waste index declined from $5.25/tCO2e over the same period.
Waste sector: Regional breakdown of retirements
Retiring Entity Heatmap
The United States is the clear leader in retirements, with totals exceeding 286 million. Significant activity is also concentrated in Europe, particularly in the UK, Germany, France, and Italy, where retirements range between 50 - 90 million. Other regions, including Australia and parts of Latin American, show moderate but consistent levels of activity.
Waste sector overview: Methane
Methane issuance and retirement trends
Quarterly Issuances, Retirements and CDR Purchases
AlliedOffsets data shows issuances from methane projects have shown steady growth over the past 15 years, driven by consistent credit generation across landfill gas, wastewater, and organic waste projects. Activity peaked several times between 2010 and 2013, before stabilising at a sustained level supported by continued verification of existing projects and new methodologies.
Landfill emissions account for roughly a quarter of total methane emissions, making projects in this space particularly significant. Retirements began to rise noticeably from 2022 onwards, reflecting growing demand for methane-linked credits. The trend peaked in 2025, with 4.78 million retirements recorded from methane projects alone. Year to date, total retirements across the waste sector stand at 31.1 million, with methane accounting for 15.4% of this total.
Current price of methane projects
As of September 2025, the weighted average price of methane credits stands at $5.67/tCO2e, up from $4.18/tCO2e in September 2024, a 35.6% increase year over year. Prices have also risen 7.5% month to month, reflecting continued upward movement in recent weeks.
Why are we talking about this now?
Methane and other superpollutants drive nearly half of global warming, yet receive less than 2% of climate finance. With the IPCC preparing a 2027 report focused on short-lived climate pollutants, attention is shifting toward faster, high-impact mitigation opportunities.
Circularity offers an effective way to cut both methane and CO2 emissions. Less than 10% of materials are reused globally, and improving recovery and recycling can significantly reduce emissions from extraction, production, and waste.
AlliedOffsets’ client Carrot is highlighting how methane prevention and resource recovery projects can deliver this systemic change, reducing emissions while creating environmental and social co-benefits.
AlliedOffsets new Circularity sector, builds on this vision, establishing circularity as a distinct area of climate action alongside established sectors such as energy, forestry, and waste.
Summary
The data highlights the growing importance of the waste sector in global climate action. While emissions have risen over the past decade, methane-focused projects are showing measurable impact and increasing market momentum. Circularity, from improved material recovery to waste prevention, represents a critical opportunity to reduce both CO2 and methane emissions.
Carrot’s work emphasises the value of targeting superpollutants for rapid climate gains, while AlliedOffsets’ new Circularity sector aims to channel finance into the infrastructure needed to make these solutions scalable. Together, they underline how waste, methane, and circularity are deeply connected and essential to building a more sustainable, low-carbon economy.