Carbon Credit Market Size - By Type (Voluntary, Compliance), By End Use (Agriculture, Carbon Capture & Storage, Chemical Process, Energy Efficiency, Industrial, Forestry & Landuse, Renewable Energy, Transportation, Waste Management) & Forecast, 2024 - 2032

Carbon Credit Market Size

Carbon Credit Market was valued at USD 103.8 billion in 2023 and is set to grow at a CAGR of 14.8% during 2024 to 2032. The expansion of carbon pricing mechanisms and the growing demand for corporate sustainability initiatives, supported by favorable government policies will drive business growth. Governments and regulatory authorities are progressively adopting market-driven approaches to incentivize emission reduction and facilitate the carbon credit trade. These approaches encompass carbon pricing mechanisms, carbon taxes, and cap-and-trade systems, all of which are broadening the market's possibilities.
 

The rising interest in nature-based solutions, including reforestation, afforestation, and sustainable land management projects, is gaining traction in the carbon credit market. These initiatives efficiently capture carbon while delivering added advantages such as biodiversity preservation and ecosystem restoration. In addition, technological advancements, particularly in data analytics and blockchain technology, are enhancing transparency and traceability in the carbon credit trading process. Blockchain is utilized to create immutable records of carbon credits, reducing the potential for double counting or fraudulent activities, thus strengthening the industry's outlook.
 

The rising social and environmental relevance, combined with the expansion of government policies and regulations, is anticipated to propel business growth. This is largely attributed to the increasing focus of investors and consumers on the social and environmental consequences of carbon credit projects. Initiatives that generate broader environmental and social benefits are garnering increased attention and investment. Additionally, government policies, incentives, and regulatory actions remain influential factors shaping the market development.
 

COVID- 19 Impact

The COVID-19 pandemic created both challenges and opportunities for the carbon credit business. While supply-side disruptions affected the generation and verification of carbon credits, demand-side dynamics were influenced by changing corporate priorities and heightened sustainability awareness. The long-term impact on the market depends on how organizations and consumers navigate the post-pandemic landscape and whether sustainability remains a central focus in recovery efforts.
 

Carbon Credit Market Trends

The growing need for carbon offsets, propelled by the increasing expectations placed on companies and governments to mitigate their carbon emissions, will enhance the industry's dynamics. This upsurge in demand enables organizations to offset emissions they are unable to internally reduce, thereby advancing their sustainability objectives. Nature-based solutions have gained prominence, with reforestation, afforestation, and sustainable land management projects assuming a prominent role. These initiatives not only sequester carbon but also provide additional benefits, including biodiversity conservation and ecosystem restoration.
 

Technological progress, notably in data analytics and blockchain, has improved the transparency and traceability of carbon credit trading. Blockchain technology is harnessed to establish unalterable records of carbon credits, reducing the potential for double-counting and fraudulent activities. The standards and certification programs for carbon credits, such as the Verified Carbon Standard (VCS) and the Gold Standard, are in a continuous state of development to preserve the quality and trustworthiness of these credits. Inter-industry collaborations are on the ascent, with companies from various sectors coming together to fund and advance carbon offset projects, nurturing partnerships aimed at collectively addressing emissions.
 

Carbon Credit Market Analysis

Based on type, the compliance carbon credit industry is witnessing dynamic business trends shaped by regulatory changes, market demands, and evolving sustainability goals. Governments and regulatory bodies are consistently raising the bar with more stringent emissions reduction targets, making compliance carbon credits essential for companies. The market is experiencing a surge in demand as organizations commit to carbon neutrality, driven by voluntary pledges and mandatory compliance mandates.
 

• Carbon pricing mechanisms, such as carbon taxes and cap-and-trade systems, are incentivizing companies to invest in these credits.
   
• Nature-based solutions, like reforestation and afforestation projects, are gaining prominence for their carbon sequestration and additional environmental benefits.
   
• Technological advancements, particularly in blockchain and data analytics, are boosting transparency and trust in carbon credit market.
   
• Companies increasingly integrate compliance carbon credits into their sustainability initiatives, appealing to eco-conscious investors and consumers.
   
• Cross-industry collaborations are also on the rise, as companies join forces to fund and develop carbon offset projects, collectively addressing emissions and advancing sustainability goal
   

Based on end use, the forestry and land-use end use segment is projected to showcase 14% growth rate up to 2032. Afforestation and reforestation projects have emerged as pivotal players in the carbon credit market, spearheading a notable transformation in climate mitigation strategies. These initiatives are garnering increasing recognition for their dual impact—efficiently sequestering carbon while simultaneously championing biodiversity preservation and ecosystem restoration.
 

The industry stands on the cusp of expansion, driven by rising climate consciousness among both consumers and investors, and the worldwide upsurge in eco-friendly initiatives. Forestry and land-use projects that offer concrete climate and societal benefits are attracting considerable interest. Furthermore, the multifaceted approach adopted by these projects, combining carbon sequestration with biodiversity preservation, community engagement, and sustainable land management practices, positions them as central trends in the continually evolving market expansion.
 

Europe carbon credit market held approximately 76.1% of the revenue share in 2022. The combination of regulatory measures, corporate commitment, public pressure, and global leadership makes Europe a region where the carbon credit is highly prioritized and actively supported. The region has set ambitious emission reduction targets, such as the European Green Deal's objective to achieve carbon neutrality by 2050. To meet these targets, the market plays a crucial role in helping companies and nations offset their emissions and achieve compliance.
 

European companies are increasingly committed to sustainability and corporate social responsibility. Carbon credits are integral to these commitments, allowing businesses to demonstrate their dedication to environmental stewardship. However, European consumers and investors are increasingly environmentally conscious and seek out sustainable and responsible businesses. As a result, companies prioritize carbon credits to align with these expectations.
 

Carbon Credit Market Share

Stakeholders in the market often focus on other performance indicators, such as the number of certified projects, the volume of credits issued, the impact of projects on emissions reductions, and the adoption of high-quality standards like the Verified Carbon Standard (VCS) and the Gold Standard. Moreover, market participants, including project developers and brokers, may have their own estimates of their share of the market based on the projects they manage and the volume of credits they transact. Eminent players across the industry are focusing on various strategic assets comprising innovative system range, merger & acquisition, robust research & development activities as a part of their strategic initiatives.
 

Prominent industry players operating across carbon credit market include:

• The Carbon Trust
• Climate Impact Partners
• South Pole
• 3Degrees
• VERRA
• TerraPass
• CarbonClear
• PwC
• EcoAct
• ClimeCo LLC.
• Ecosecurities
• ALLCOT
• Atmosfair
• The Carbon Collective Company
• Sterling Planet Inc.
• WGL Holdings, Inc.
• Green Mountain Energy Company

Carbon Credit Market News

• In October 2023, First Abu Dhabi Bank came into a strategic agreement with Masdar and Blue Carbon to supply carbon credits, a move that will boost the trading of emissions permits in the UAE. This strategic move is in alignment with the UAE's recently reinforced carbon emissions reduction targets for the current decade and its overarching objective of achieving climate neutrality by the year 2050. By facilitating the trading of emissions permits and actively participating in carbon credit initiatives, the UAE is making a strong commitment to address climate change on both a national and international scale.
   
• In October 2023, Dubai-based company, Blue Carbon, and Zimbabwe join forces for a venture and environmentally impactful partnership through carbon credit partnership. The memorandum of understanding (MoU), valued at USD1.5 billion, represented a commitment to fund extensive forest protection and rehabilitation projects across Zimbabwe. It serves as a testament to the growing recognition of the carbon credit market as a powerful tool in mitigating the impacts of climate change while fostering economic and ecological resilience.
   

This market research report on carbon credit includes in-depth coverage of the industry with estimates & forecast in terms of ‘USD Million’ from 2019 to 2032, for the following segments:

Click here to Buy Section of this Report

By Type

• Voluntary
• Compliance

By End Use

• Agriculture
• Carbon Capture & Storage
• Chemical Process
• Energy Efficiency
• Industrial
• Forestry & Landuse
• Renewable Energy
• Transportation
• Waste Management
• Others

The above information has been provided for the following regions across the regions.

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