Carbon Credit Market Size – By Type (Compliance, Voluntary), By Sector (Energy, Transportation, Residential and Commercial Buildings, Industry, Agriculture, Forestry &Landuse, Water and Wastewater, Others) & Forecast, and Geography, and Region (North America, Europe, Asia-Pacific, and Middle East & Africa)—Forecast till 2028

Description

Market Overview:

The global carbon credit market was valued at USD 414.8 billion in 2023 and is projected to reach USD 1,602.7 billion by 2028, rising at a CAGR of 31.0% in 2023-2028. Carbon credits permit the holder to release a precise quantity of carbon dioxide or other greenhouse gases. Each credit grants permission to emit one ton of carbon dioxide or an equivalent amount of other GHGs. These credits are also referred to as carbon offsets. A carbon credit forms one part of a cap-and-trade system. Polluting companies receive credits permitting them to emit up to a certain threshold, which is gradually lowered over time. If a company doesn’t use all its credits, it can sell the excess to other companies that require them, delivering a dual incentive for private firms to lower their greenhouse gas emissions.

What Factors are Leading to the Growth of Global Carbon Credit Market:

• The global carbon credit market growth is propelled by an increase in environmental concerns and government support, a rise in different research and development activities, growing partial use of carbon credits by companies, and mounting financial support to local communities.
• The market growth rate is influenced by several factors, including the increasing carbon emissions in the Earth’s atmosphere, the growing adoption of net-zero emission targets, and the increasingrequirement for natural climate solutions.
• Several factors influence the market growth rate, such as the rise in carbon emissions in the Earth’s atmosphere, the increasing adoption of net-zero emission targets, and the growing demand for natural climate solutions.

Which Industry Trends Have Been Fueling the Growth?

Growth in adoption of net-zero emission goals: As different companies focuson carbon neutrality, the requirement for carbon credits to offset inescapable emissions is growing. For instance, Unilever has dedicated to accomplishing net-zero emissions by 2039, encouraging its investment in carbon offset programs. Governments are also encouraging net-zero practices, particularly the European Union with its Green Deal, which is propellingthe need for carbon credits. This trend is growing the development of innovative carbon reduction projects, comprising reforestation and sustainable agriculture, as businesses and governments chase effective strategies to address their ambitious net-zero targets. These factors are driving market growth during the forecast period.

Increase in demand for consistent evaluation and transparency in carbon offset projects: The growing demand for consistentevaluation and transparency in carbon offset projects is a significant advancement in the global market. This need is shown by the development of carbon credit rating organizations, which assess the environmental impact and lawfulness of carbon offset projects, offering investors and businesses confirmable estimates of their achievement in decreasing emissions. For instance, SustainCERT specializes in confirming the environmental integrity of carbon credits, ensuring they address stringent criteria. This trend towards higher accountability and trust in carbon offsetting facilitates knowledgeable decision-making for market participants and motivates broader participation in sustainable practices and carbon neutrality efforts. Consequently, these factors are propelling the growth of the global market in the forecast period.

What is the Current Structure ofthe Global Carbon Credit Market?

By sector, the forestry and land-use segment dominated the largest market share in the global market

The forestry and land-use segment isanticipated to exhibit a 14% growth rate through 2032. Afforestation and reforestation projects have become important in the carbon credit market, propelling significant fluctuations in climate mitigation strategies. These initiatives are attaining recognition for their dual benefits: efficiently sequestering carbon and encouraging biodiversity conservation and ecosystem restoration.The industry is anticipatedtoexpand, driven by rising climate awareness among consumers and investors and a global increase in eco-friendly initiatives. Forestry and land-use projects, which offer tangible climate and societal advantages, are drawing significant interest. These projects make use of a multifaceted approach, merging carbon sequestration with biodiversity conservation, community participation, and sustainable land management practices. This all-inclusive strategy positions them as the foremost trends in the evolving market, propelling continuous growth.

By Sector, the energy segment is expected to dominatethe global carbon credit market growth

The energy sector is projected to register the global carbon credit market during the forecast period. According to Market Insights, the energy segment registered for nearly $53.3 billion globally during 2019. Projects using solar or wind power to inject electricity into the grid can swap power generated from conventional energy sources, thereby decreasing carbon dioxide emissions. These projects can receive carbon credits through the Clean Development Mechanism (CDM).

By Region, the Europe segment registers the largest market revenue share in the global market

Europe is estimated to contribute 85% to the market growth by 2028. According to analysis, extensive market predicting highlights regional trends and drivers shaping the market’s growth during the forecast period. Developed countries across Europe, such as the UK and Germany, are popular buyers in the global carbon credit market. To accomplish climate neutrality by 2050, the European Union launched an international emissions trading system (ETS) during 2005. This system sets CO2 costs and utilizes trading to encourage a carbon-neutral industrial landscape. In February 2023, the EU accepted key recommendations, making them law. That same month, EU carbon permits touched a record-high price of $107 per ton. Thereby, EU lawmakers introduced reforms, comprising fines for companies surpassing CO2 emission limits. These factors are propelling market growth in Europe in the forecast period.

Competitive Analysis

Companies in the global carbon credit market are significant investing in different research and development activities to launch new product and expand their product portfolio. Giant market players in the market are efficiently adopting strategies including new product development, collaboration, partnerships, merger and acquisition, and others to expand footprint and registering the largest market share in the global market.

Market Segmentation

Global Carbon Credit Market, by Type

• Compliance Market
• Voluntary Market

Global Carbon Credit Market, by Sector

• Energy
• Transportation
• Residential and Commercial Buildings
• Industry
• Agriculture
• Forestry&Landuse
• Water and Wastewater
• Others

Global Carbon Credit Market, by Region

• North America
  • US
  • Canada
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Indonesia
  • Malaysia
  • Rest of Asia-Pacific
• Europe
• France
• Germany
• Italy
• Netherlands
• Spain
• Austria
• Middle East & Africa
  • GCC Countries
  • Turkey
  • South Africa
  • Rest of Middle East & Africa
• Others

Market Players Included

• AltaGas Ltd.
• Anew Climate LLC
• Carbon Credit Capital LLC
• CarbonBetter
• ClearSky Climate Solutions LLC
• Climate Bridge Ltd.
• Climate Impact Partners LLC
• ClimatePartner GmbH
• ClimeCo LLC
• EKI Energy Services Ltd.
• Finite Carbon Corp.
• Just Energy Advanced Solutions LLC
• Microsoft Corp.
• NativeEnergy
• natureOffice GmbH
• NRG Energy Inc.
• South Pole
• Sterling Planet
• Tasman Environmental Markets