Carbon Credit Market 2024 – Market Size & Segments Analysis, Industry Trends, Manufacturers Analysis, Opportunities and Forecast 2030

The global market value of the carbon credit (compliance and voluntary) market was valued at USD XX.X billion in 2022, and a CAGR of 7.6% is expected during the forecast period. Increasing adoption of cap-and-trade systems and carbon taxation policies by governments worldwide to meet climate goals is driving demand for compliance credits. Commitments under global frameworks like the Paris Agreement are compelling nations to reduce emissions, thereby expanding compliance markets. Industries such as energy, aviation, and manufacturing are subject to stricter emissions regulations, increasing their reliance on carbon credits to meet compliance targets.

Industries such as energy, aviation, and manufacturing are subjected to stricter emissions regulations, increasing their reliance on carbon credits to meet compliance targets. An increasing number of corporations are pledging net-zero emissions, creating significant demand in both compliance and voluntary markets. Pressure from investors for strong ESG performance is motivating businesses to offset their carbon footprints through voluntary credits.

Growth Drivers

Innovation in carbon capture and storage technologies is expanding the supply of high-quality carbon credits, which boosts market growth. Companies are using voluntary carbon offsets to demonstrate environmental responsibility and enhance their brand image. Blockchain technology enhances brand efficiency in carbon credit transactions, making the market more attractive to participants.

Pressure from investors for strong ESG performance is motivating businesses to offset their carbon footprints through voluntary credits. Initiatives to create standardized methodologies and certifications to improve trust and reliability are driving growth in the market. Growing awareness of climate change issues is influencing individuals and businesses to offset their emissions voluntarily. Programs such as Climate Neutral and science-based targets are encouraging organizations to participate in voluntary carbon markets. Investments in reforestation, afforestation, and soil-carbon sequestration projects are creating new sources of carbon credits.

Carbon offset programs tied to renewable energy development are thriving in emerging markets. Shifting from fossil fuels to renewable energy sources increases the demand for carbon offsets as industries transition globally. Collaboration between government organizations, NGOs, and private entities fosters investment in carbon offset projects. Development in agencies and global organizations is supporting carbon markets in developing countries, increasing participation, and expanding markets.

Segmentation

Type

·         Compliance

·         Voluntary Market

Project Type

·         Avoidance/Reduction Project

·         Removal/Sequestration Project

End-User

·         Energy

·         Aviation

·         Transportation

·         Industrial

·         Buildings

·         Others

Regional Outlook

·         Asia Pacific

·         North America

·         Latin America

·         Middle East and Africa

·         Europe

Carbon Credit Market End-User Segmentation

On the basis of the end user, the carbon credit market is segmented into energy, aviation, transportation, industrial, buildings, and others. The energy sector is the leading segment in the market and is expected to dominate the market during the forecast period because it is the largest contributor to global greenhouse gas emissions, primarily due to fossil fuel combustion in power generation. Policies such as the European Union Emissions Trading Systems and Regional Cap-and-Trade system often prioritize the energy sector.

Energy companies are major participants in carbon offset projects to balance emissions during their transitions to renewable sources. Investment in projects like wind farms, solar installation, and methane capture are frequently linked to carbon credit generation. Offsetting emissions through carbon credits is a more cost-effective short-term solution compared to immediate large-scale infrastructure changes. Aviation sectors are significantly consuming carbon credits due to limited short-term decarbonization options. Carbon offset programs tied to renewable energy development are thriving in emerging markets. Shifting from fossil fuels to renewable energy sources increases the demand for carbon offsets as industries transition globally.

Transportation is a major emissions contributor; its reliance on carbon credits is lower because electrification and fuel efficiency improvements are advancing rapidly. The industrial sector is also witnessing significant growth in the market.

 Regional Outlook

On the basis of the regions, the Carbon Credit Market is segmented into 5 regions: Asia Pacific, North America, Latin America, Europe, and the Middle East and Africa. Asia Pacific is the leading segment in the market because it is home to some of the largest greenhouse gas emitters, such as China, India, and Japan. These countries have set ambitious decarbonization targets, driving demand for carbon credits. Governments in the region are actively implementing policies and carbon pricing mechanisms to reduce emissions.

Many countries in Asia Pacific are integrating carbon credit markets into their climate policies to meet Paris Agreement goals. Asia Pacific is a hub for renewable energy projects and afforestation initiatives, which generate voluntary carbon credits. Developing nations like Indonesia, Vietnam, and the Philippines are leveraging carbon finance to fund these projects. Many multinational corporations in Asia-Pacific are purchasing carbon credits to achieve their net-zero targets. Growing interest in voluntary carbon markets has further bolstered the region’s prominence.

Rapid industrialization and urbanization in developing economies like China, India, Japan, and South Korea increase emissions, necessitating investments in mitigation strategies, including the purchase of carbon credits. High emissions, proactive policies, and international cooperation make the region the leader in the carbon credit market significantly. The presence of key players in emerging economies is driving growth in the market. The European Union Emissions Trading System is one of the most established carbon markets globally. It serves as a cap-and-trade system, covering over 40% of the EU’s greenhouse gas emissions.

Europe’s commitment to achieving net-zero emissions by 2050 and the European Green Deal drives the demand for carbon credits. Corporate initiatives and voluntary markets are growing with increasing participation from industries not covered under the EU ETS. Latin America, being rich in natural resources, particularly forests, is a significant source of carbon offset projects, especially nature-based solutions like reducing emissions from deforestation and forest degradation.

Brazil and Colombia are leading in carbon credit project development. Some markets in the Middle East and Africa, like Saudi Arabia and the UAE, are investing in carbon capture, utilization, and storage and renewable energy projects. Africa’s potential for nature-based solutions is vast due to its land availability. Growing participation in voluntary carbon markets, particularly by African nations like Ghana, Kenya, and South Africa, is witnessing significant growth in the market.

 Key Players

·         Finite Carbon

·         Native Energy

·         3Degrees

·         EKI Energy Services Ltd.

·         South Pole Group

·         Carbon Care Asia Limited

·         Terrapass

·         Climetrek Ltd.

·         Carbon Better

·         Other Players