How does vintage affect the pricing of a carbon credit?

The carbon market works in such a way that a credit with a more recent vintage generally (but not always) fetches a higher price compared to an older vintage. This is due to higher market demand for newer vintages.

There are multiple fundamental explanations for this, but one obvious reason is that the purchase and retirement of more recent vintages by corporations is perceived as a more reputable offsetting action, as it more effectively incentivizes the ongoing and new project toward climate mitigation as compared to carbon avoidance/removal achieved many years prior.

Thus, a vintage curve of a carbon credit must be monotonic in nature. In fact, an older vintage with a higher price than a more recent vintage may be interpreted as an arbitrage opportunity in the market.