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The Carbon Credit Market size is forecast to increase by USD 1,437.52 billion, at a CAGR of 31.01% between 2023 and 2028. The growth rate of the market depends on several factors, such as the rising carbon emissions in the earth's atmosphere, the increase in adoption of net-zero emission targets, and the growing demand for natural climate solutions. This market report and analysis offers Market size, historical data (2018-2022), and future projections presented in terms of value (in USD billion) for all the mentioned segments.
Market Forecast 2024-2028
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Our researchers studied the market research and growth data for years, with 2023 as the base year and 2024 as the estimated year, and presented the key drivers, trends, and challenges for the market.
As several companies resolve to become carbon neutral, there is an increasing demand for carbon credits to offset unavoidable emissions. For example, companies such as Unilever are committed to being net-zero by 2039, which has fueled their investment in carbon offset programs.
Moreover, governments such as the European Union with its Green Deal, are enacting rules to encourage net-zero practices, driving up demand. In addition, this trend is accelerating the development of innovative carbon reduction projects ranging from reforestation initiatives to sustainable agriculture, as businesses and governments seek effective strategies to meet their ambitious net-zero targets. Hence, such factors are driving the market growth during the forecast period.
The advent of carbon credit rating organizations is a key development in the global market, indicating an increasing demand for standardized assessment and transparency in carbon offset projects. In addition, these organizations assess the environmental impact and legitimacy, offering investors and businesses a verifiable estimate of their success in reducing carbon emissions.
Moreover, SustainCERT, for example, specializes in certifying carbon credit's environmental integrity and ensuring they fulfill demanding criteria. In addition, the trend highlights a shift towards greater accountability and trust in carbon offsetting, allowing informed decision-making for market participants and promoting broader participation in sustainable practices and carbon neutrality efforts. Hence, these factors are driving the growth of the global market during the forecast period.
The shortage of standardized and open standards casts doubts on the legitimacy and quality of carbon credits, fuelled worries about the environmental impact of credited projects. In addition, variability in emission reduction verification procedures, as well as varied reporting standards, undermine its credibility.
Moreover, the lack of centralized oversight authority allows for the possible manipulation or greenwashing of carbon credit initiatives. In addition, addressing the governance deficit is critical for developing stakeholder confidence, assuring the effectiveness of carbon offset projects, and preserving market integrity as a key tool in climate change mitigation. Hence, such factors are hindering the market growth during the forecast period.
The power segment is estimated to witness significant growth during the forecast period. Carbon neutralizing projects minimize the reliance on fossil fuels, including coal and natural gas, in the power generation sector and provide a pollution-free resource for energy generation, which has minimal risk of depletion. In addition, to reach the global goal of keeping global temperature rise below 2 degree C or 1.5 degree C above pre-industrial levels, energy generation must shift from the utilization of non-renewable fossil fuels such as coal, oil, and natural gas, to renewable energy sources, such as wind, solar, tidal, and geothermal energy.
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The power segment was the largest segment and was valued at USD 49.15 billion in 2018. Moreover, this will lead to a decline in the amount of greenhouse gas emissions and lower the atmospheric concentration of CO2, thus contributing to mitigating the effects of global climate change. In addition, the current energy strategy in Europe includes plans for the renovation of the power infrastructure, power supply diversification, interconnections, and common trading platforms. For instance, in May 2023, the Union Minister of Power and Environment in India announced plans for the development of a carbon credit rating scheme for decarbonization. Thus, the objective is to develop the Indian Carbon Market (ICM) with an established national framework to decarbonize the Indian economy by pricing GHG emissions. Hence, such factors are fuelling the growth of this segment which in turn drives the market growth during the forecast period.
Based on the type, the market has been segmented into compliance and voluntary. The compliance?segment will account for the largest share of this segment. The compliance segment refers to marketplaces through which a certain number of CO2 certificates are issued per company and year. In addition, carbon markets are set up by governments as a means of achieving their carbon reduction goals. Moreover, the compliance market is a carbon offset market created by the need to comply with a regulatory act. In addition, they are voluntary and must be adhered to by companies. In emissions trading systems (ETS) programs, regulators set a cap on carbon emissions, which slowly decrease over time. Hence, such factors are fuelling the growth of this segment which in turn drives the market growth during the forecast period.
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Europe is estimated to contribute 85% to the growth by 2028. Technavio's analysts have provided extensive insight into the market forecasting, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. Several developed countries in Europe, including the UK, Germany, and others, are considered prominent buyers in the global market. In addition, in order to reach the target of becoming climate-neutral by 2050, I European Union launched an international emissions trading system (ETS) in 2005, which finalizes the costs of CO2 and uses a trading system to promote the advancement of a carbon-neutral industrial landscape. For instance, in February 2023, these recommendations were approved and became legislation. In addition, in February 2023, the EU carbon permits were traded at a record-high price of USD107 per ton, following which EU lawmakers have been introducing key reforms such as charging fines on companies if they emit more CO2 than permitted. Hence, such factors are driving the market growth in Europe during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
3Degrees Group Inc: The company offers carbon credit projects such as Giriraj Bundled Wind Project, Meridian SF6 reduction project, and Family owned farm anaerobic digester project.
We also have detailed analyses of the market’s competitive landscape and offer information on 20 market companies, including:
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, and Tasman Environmental Markets
Technavio market forecast the an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies companies into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Companies are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The global carbon offset market is pivotal in combating carbon emissions and mitigating the impacts of global warming. It encompasses both the voluntary carbon market and compliance segments, with significant funding directed towards various projects aimed at reducing carbon emissions. These initiatives include forestry projects and carbon storage efforts to achieve net-zero greenhouse-gas emissions. However, challenges such as leakage of offsets and ensuring the validity of carbon credits remain. Despite this, leading companies are driving decarbonization efforts and supporting climate protection initiatives. Developing countries receive financial support for development projects while also promoting biodiversity and livelihood conservation. Fluctuating prices and economic factors pose challenges, yet the market remains vital in advancing carbon neutralization goals and supporting climate goals worldwide.
The market analysis and report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
Market Scope |
|
Report Coverage |
Details |
Page number |
163 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 31.01% |
Market Growth 2024-2028 |
USD 1,437.52 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
29.25 |
Regional analysis |
Europe, Asia, North America, and the Rest of the World (ROW) |
Performing market contribution |
Europe at 85% |
Key countries |
US, Germany, UK, Italy, and China |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
3Degrees Group Inc., AltaGas Ltd., Anew Climate 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, and Tasman Environmental Markets |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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