The global Carbon Credit Market is estimated to be valued at US$ 31.54 Bn in 2023 and is expected to exhibit a CAGR of 24% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
The carbon credit market involves trading of credits issued for emissions reduced or removed from the atmosphere. Individuals and organizations can offset their carbon footprint by purchasing carbon credits representing one ton of carbon dioxide equivalent emissions reduced through projects like renewable energy generation and reforestation.
Market key trends:
One of the key trends in the global carbon credit market is increasing adoption of internal carbon pricing initiatives. Many large companies are placing an internal price on carbon to guide investment and strategic decisions. As of 2020, over 1,300 companies have implemented or are preparing an internal carbon price according to a World Bank report. By charging different business units a notional price for carbon emissions based on a projected future carbon tax, companies are incentivized to focus on lowering emissions for competitive advantage and readiness for a more carbon-constrained future economy.
Strength: Carbon credits allow flexible compliance with emission reduction targets at lower costs. Offsetting also provides an alternative for hard-to-abate sectors to contribute to emission goals.
Weakness: Additionality and permanence of emission reductions from offset projects can be difficult to verify. There is also a lack of standardization among different carbon credit programs.
Opportunity: Growing carbon pricing around the world via emissions trading schemes and carbon taxes will continue expanding the market. New opportunities are emerging in forestry, waste management and renewable energy credits.
Threats: Alternative climate policies like a direct tax on carbon could reduce the demand for offsets. Support for offsetting may also decline if they are perceived as an excuse to delay more ambitious emission cuts.
Global Carbon Credit Market Demand is expected to witness high growth, exhibiting CAGR of 24% over the forecast period of 2023 to 2030, due to increasing regulations around carbon pricing worldwide. The market size for carbon credits was estimated to be US$ 31.54 Bn in 2023.
North America dominated the carbon credit market in 2022 and is expected to maintain its lead through 2030. This can be attributed to the California Cap-and-Trade Program and growing carbon pricing initiatives at the state and federal level in countries like the US and Canada. Europe is also a major market, supported by the EU Emissions Trading Scheme.
Key players operating in the global carbon credit market are WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Clear Sky Climate Solutions, Sustainable Travel International, 3 Degrees, terrapass, and Sterling Planet, Inc. These companies are focusing on strengthening their offset project portfolios and exploring opportunities in compliance and voluntary carbon markets.
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it