The carbon offset market refers to trading of credits for reducing or offsetting carbon emissions. It allows industries and individuals to compensate for their own emissions by financing emissions-reducing projects elsewhere. With growing environmental concerns, the demand for offsets is increasing to achieve carbon neutrality goals.
The global Carbon Offset Market is estimated to be valued at US$ 414.8 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends
One of the major trends driving the growth of the carbon offset market is the increasing corporate commitments and pledges towards achieving net-zero emission targets. Many large companies have committed to becoming carbon neutral by offsetting their remaining emissions through investing in carbon offset projects such as renewable energy, forestry and land-use projects. This growing trend is expected to significantly propel the demand for carbon offsets during the forecast period.
Strength: Carbon offsets have the potential to reduce carbon emissions and help mitigate climate change. They provide a flexible compliance option for organizations seeking to neutralize their carbon footprints.
Weakness: Carbon offsets have been criticized over concerns regarding additionality, effectiveness, and integrity. There are concerns that some offset projects might not result in real and permanent emissions reductions.
Opportunity: Growing corporate climate action and net zero commitments are driving increased demand for high-quality carbon offsets. Regulatory policies like carbon pricing and emissions trading schemes also create new opportunities.
Threats: Alternatives like direct emissions reductions and on-site renewable energy projects could displace demand for offsets over time. Lack of international agreement over carbon credit eligibility and quality poses risks to market growth.
The global Carbon Offset Market Demand is expected to witness high growth over the forecast period driven by climate change concerns and net zero targets. The global Carbon Offset Market is estimated to be valued at US$ 414.8 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030.
Regionally, North America currently dominates offset demand supported by well-established carbon markets. Europe and Asia Pacific are also fast-growing markets with expanding emissions trading and voluntary offset demand.
Key players operating in the carbon offset market include Apta, South Pole, Carbon Clear, 3Degrees, Terrapass, NativeEnergy, Green Mountain Energy, and Schneider Electric. Companies are investing in new offset project development and digital marketplaces to meet rising corporate compliance and voluntary demand. Verification and certification are also areas of increased focus to ensure offset integrity and build buyer confidence.
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it