Global Carbon Offset/Carbon Credit Market Size By Type (Compliance Market, Voluntary Market), By End-User (Power, Aviation, Transportation), By Geographic Scope And Forecast

Carbon Offset/Carbon Credit Market Size And Forecast

Carbon Offset/Carbon Credit Market size was valued at USD 330.8 Billion in the year 2022 and it is expected to reach USD 2816.5 Billion in 2030, growing at a CAGR of 30.7% from 2023 to 2030.

The global market for carbon offsets and credits plays a crucial role in the battle against climate change by promoting global emission reductions and easing the transition to a more sustainable and carbon-neutral future. The Global Carbon Offset/Carbon Credit Market report provides a holistic evaluation of the market. The report offers a comprehensive analysis of key segments, trends, drivers, restraints, competitive landscape, and factors that are playing a substantial role in the market.

Global Carbon Offset/Carbon Credit Market Definition

A system for reducing greenhouse gas (GHG) emissions by enabling people, businesses, and governments to offset their carbon footprint through the purchase and use of carbon credits is referred to as the Global Carbon Offset/Carbon Credit Market. A carbon credit represents one metric ton of carbon dioxide (CO2) or its equivalent in terms of GHG reduction, removal, or avoidance. In this market, organizations that generate GHGs above a certain limit must either reduce their emissions or compensate for them by buying carbon credits. These credits are produced by activities like renewable energy programs, afforestation campaigns, or energy efficiency measures that actively lower or eliminate GHGs from the atmosphere.

Emitters effectively finance and support these initiatives by buying these credits, which counteracts their own emissions. Several mechanisms help the market function. First, organizations exist that validate and certify carbon offset projects, making sure they adhere to strict criteria and regulations. The Carbon Standard (VCS), the Gold Standard, or the Clean Development Mechanism (CDM) under the United Nations Framework Convention on Climate Change (UNFCCC) are a few examples of the various standards that exist around the world. A project can generate carbon credits once it has received certification. These credits can be purchased and sold through bilateral agreements or on a variety of trading platforms.

Regulations and regulations that set emission reduction goals, supply and demand dynamics, and other factors all have an impact on the cost of carbon credits. By encouraging emission reduction efforts and supporting the shift to a low-carbon economy, the Global Carbon Offset/Carbon Credit Market is essential in the fight against climate change. It enables organizations and governments to assume accountability for their environmental impact by funding green initiatives that lower GHG emissions. Additionally, it offers a channel for financial flows to developing nations, which may offer excellent chances for carbon offsets.

Global Carbon Offset/Carbon Credit Market Overview

The Global Carbon Offset/Carbon Credit Market is a booming market that is supported by a number of important aspects. The market’s growth and development are shaped by a number of drivers and restraints. The goal of the expanding global market for carbon offsets and credits is to lower greenhouse gas (GHG) emissions by offering financial incentives to businesses and individuals to fund initiatives that reduce or offset carbon dioxide equivalents (CO2e). The growing demand for carbon offset programs is a result of a growing understanding of how climate change will affect society.

People, businesses, and governments are encouraged to take action to reduce their carbon footprints and support global emission reduction targets. Many countries have implemented or are considering regulatory frameworks such as carbon pricing, emissions trading schemes, and cap-and-trade systems. These regulations stimulate the market and encourage investment in emission reduction initiatives by increasing demand for carbon credits. Companies are incorporating environmental concerns into their operations and implementing sustainability measures at an increasing rate.

Businesses can demonstrate their dedication to lowering emissions and accomplishing their environmental goals by using carbon offsets, which will improve their reputation and brand. The market for carbon offsets offers investment opportunities in a number of industries, including forestry, renewable energy, and energy efficiency initiatives. These initiatives provide carbon credits that may be sold on the market, attracting investment and driving the development of low-carbon technologies. Through voluntary carbon offset programs, people and organizations can buy carbon credits to compensate for their emissions.

Due to the need of both consumers and companies to reduce their carbon footprint and show their commitment to sustainability, this market segment has experienced tremendous growth. The global market for carbon offset/carbon credit has some limitations and difficulties despite the growth prospects. There are no standardized methods for calculating and confirming emission reductions in the Carbon Offset/Carbon Credit Market. This may cause concerns about the reliability and caliber of carbon credits, which would undermine trust in the market.

To ensure openness and trustworthiness, it is crucial to develop credible standards. Prices for carbon credits can fluctuate depending on a variety of variables, including policy changes, supply and demand in the market, and investor sentiment. Long-term investments in pollution reduction schemes may be discouraged by uncertainty about future prices. Carbon leakage occurs when emissions reductions in one jurisdiction led to increased emissions in another jurisdiction with less stringent regulations. This might make carbon offset initiatives less effective and make it harder to reduce emissions globally.

Global Carbon Offset/Carbon Credit Market Segmentation Analysis

The Global Carbon Offset/Carbon Credit Market is segmented on the basis of Type, End-User, and Geography.

Carbon Offset/Carbon Credit Market, By Type

• Compliance Market
• Voluntary Market

Based on Type, the market is bifurcated into Compliance Market and Voluntary Market. The voluntary market segment holds the largest market share and is estimated to witness the highest CAGR during the forecast period. Regulations imposed by authorities in the compliance market are not present in the voluntary market. With increased openness and clarity surrounding credit quality, participants can take an active role in the voluntary market with trust.

Carbon Offset/Carbon Credit Market, By End-User

• Power
• Aviation
• Transportation
• Energy
• Industrial
• Buildings
• Others

Based on End-User, the market is bifurcated into Power, Aviation, Transportation, Energy, Industrial, Buildings, and Others. The segment for Power has one of the largest market shares and is anticipated to grow at the fastest rate over the coming years. Forestry, agriculture, and waste are among others end-user. The power sector is the main segment adopting carbon offsetting initiatives and schemes since it is a large emitter and uses commercially accessible low-GHG technologies.

Carbon Offset/Carbon Credit Market, By Geography

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

Based on Geography, the Global Carbon Offset/Carbon Credit Market is bifurcated into North America, Europe, Asia Pacific, Latin America, and Middle East and Africa. In the Global Carbon Offset/Carbon Credit Market, Asia Pacific has the greatest market share, followed by Europe and it is expected to continue expanding steadily over the forecast period. ETS might develop into a significant climate policy tool to assist China in achieving its long-term low-carbon plan and its Nationally Determined Contribution (NDC) to the Paris Agreement on Climate Change. As a result, these elements are anticipated to stimulate the market’s expansion in the Asia Pacific region.

Key Players

The “Global Carbon Offset/Carbon Credit Market” study report will provide valuable insights with an emphasis on the global market scenario. The major companies operating in the market are Finite Carbon, CarbonBetter, TerraPass, Carbon Care Asia, ClimateTrade, ClimatePartner, Climate Impact Partners, ClimeCo, Forest Carbon, Carbonfund, EKI Energy Services, South Pole, 3Degrees, Tasman Environmental Markets, NativeEnergy.

Our market analysis offers detailed information on major players wherein our analysts provide insight into the financial statements of all the major players, product portfolio, product benchmarking, and SWOT analysis. The competitive landscape section also includes market share analysis, key development strategies, recent developments, and market ranking analysis of the above-mentioned players globally.

Key Developments

• In November 2022, Merge Electric Fleet Solutions (Merge), a business and technology platform that offers commercial fleets with a clear, cheap, and data-driven route to fleet electrification, and 3Degrees, a top global provider of climate solutions and a recognized B Corp, have announced their partnership.  In order to accelerate the transition to EV fleets and advance towards more general climate goals like Net Zero or Science Based Targets, corporate customers can take advantage of 3Degrees’ decades of experience in climate consulting and Merge’s top EV and infrastructure analysis.
• In August 2022, South Pole and Siemens Smart Infrastructure joined together to provide businesses with a comprehensive selection of finance options and energy-related emissions-reduction solutions. As a crucial tenet of a more comprehensive corporate net zero emissions strategy, credible decarbonization roadmap development and implementation are now covered by an end-to-end service offering that corporate leaders may take advantage.

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• Qualitative and quantitative analysis of the market based on segmentation involving both economic as well as non-economic factors.
• Provision of market value (USD Billion) data for each segment and sub-segment.Indicates the region and segment that is expected to witness the fastest growth as well as to dominate the market.
• Analysis by geography highlighting the consumption of the product/service in the region as well as indicating the factors that are affecting the market within each region.
• Competitive landscape which incorporates the market ranking of the major players, along with new service/product launches, partnerships, business expansions and acquisitions in the past five years of companies profiled.
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