USD 1.29 billion
Carbon Credits Market Size, Share, Growth Analysis, By Type (Regulatory, Voluntary), By Project Type (Avoidance/Reduction Projects, Removal/Sequestration Projects), By End-use (Aviation, Energy, Industrial), By Region - Industry Forecast 2024-2031
Report ID:
SQMIG25E2111 |
Region:
Global |
Published Date: February, 2024
Pages:
223
|Tables:
88
|Figures:
66
Carbon Credits Market Insights
Global Carbon Credits Market size was valued at USD 2.2 billion in 2022 and is poised to grow from USD 479.41 billion in 2023 to USD 69.88 billion by 2031, growing at a CAGR of 39.4%during the forecast period (2024-2031).
Carbon credits operate as permits, each representing the removal of one ton of carbon dioxide from the environment. These credits are predominantly acquired by individuals or businesses seeking to offset their carbon emissions stemming from industrial activities.
Various registries such as the American Carbon Registry (ACR), Climate Action Reserve (CAR), and the UN Clean Development Mechanism (UN CDM), among others, oversee and regulate these carbon credits. Revenue generated from the sale of these credits serves as crucial financial support for emission reduction projects.
This funding plays a pivotal role in incentivizing and financing additional initiatives geared towards reducing emissions.
Ultimately, this mechanism contributes significantly to global endeavors aimed at mitigating climate change and facilitating the transition towards a low-carbon economy.
Market Snapshot - 2024-2031
Global Market Size
Largest Segment
Voluntary
Fastest Growth
Industrial
Growth Rate
55.5% CAGR
Global Carbon Credits Market ($ Bn)
Country Share for Asia Pacific Region (%)
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Carbon Credits Market Segmental Analysis
Global Carbon Credits Market segmented by Type, Project Type, End user and region. Based on Type, the market is segmented into Regulatory and Voluntary. Based on Project Type, the market is segmented into Avoidance/Reduction Projects, Removal/Sequestration Projects (Nature-based, Technology-based. Based on end user, the market is segmented into Power, Energy, Aviation, Transportation, Industrial, Petrochemical, Buildings, and Others. Based on Region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & and Africa.
Analysis by Type
In 2022, the regulatory segment emerged as the dominant force within the carbon credits market. Within the regulatory carbon credits market, businesses are obligated by legal mandates to offset their carbon emissions. This sub-segment operates under stringent regulations wherein industries with significant carbon emissions are bound by emission standards established within the Framework of the United Nations Convention on Climate Change (UNFCCC). The regulatory framework delineated by UNFCCC mandates these industries to adhere to specified emission limits and subsequently offset any excess emissions by purchasing carbon credits.
The voluntary segment within the carbon credits market plays a crucial role in enabling entities, including individuals and businesses, to voluntarily offset their carbon emissions. Unlike the regulatory segment, where compliance with mandated emission standards drives the purchase of carbon credits, the voluntary segment operates based on self-initiated efforts to mitigate environmental impact. Individuals or organizations purchasing voluntary carbon credits do so voluntarily, driven by a commitment to environmental stewardship, sustainability goals, or a desire to offset their carbon footprint beyond regulatory requirements.
Analysis by System
In 2022, the cap-and-trade sub-segment emerged as the leading force within the global carbon credits market. Cap-and-trade systems commonly incorporate the utilization of offsets, which play a significant role within this sub-segment. These offsets represent credits generated from projects specifically aimed at reducing emissions. While these emissions reduction projects might not fall under the direct purview of the emission cap set by regulatory bodies, they still contribute to the overall reduction of emissions.
The baseline-and-credit segment in the carbon credits market operates on the premise of establishing a baseline level of emissions and subsequently rewarding entities for surpassing this baseline by reducing emissions beyond the established threshold. This segment employs a mechanism wherein businesses or projects that successfully reduce emissions below a predetermined baseline are issued credits for the surplus reduction.
Global Carbon Credits Market By Type
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Carbon Credits Market Regional Insights
In 2022, the Asia-Pacific emerged as the dominant force in the global carbon credits market and is anticipated to maintain its position as the fastest-growing region throughout the forecast period. The market's prevalence in countries such as China, Japan, India, among others, is attributed to numerous sustainability initiatives undertaken by companies within this region. Notably, countries such as Japan have made significant strides in promoting sustainability, exemplified by the decision in May 2022 to launch the region's inaugural exchange specifically dedicated to carbon emissions trading.
North America plays a significant role in the carbon credits market, contributing to the evolution and development of carbon trading initiatives. The region has seen active engagement in establishing and implementing various carbon pricing mechanisms, including cap-and-trade systems and carbon markets, across different states and provinces. Jurisdictions within North America, such as California and Quebec, have established linked cap-and-trade systems, indicating a collaborative approach to addressing carbon emissions.
Global Carbon Credits Market By Region
- Largest
- Fastest
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Carbon Credits Market Dynamics
Drivers
Rise in Demand for Carbon Credits
- The forecasted surge in demand for carbon credits holds considerable weight, yet McKinsey's analysis suggests a potential equilibrium by 2030, wherein the anticipated demand aligns with the projected annual supply of carbon credits, estimated at 8 to 12 GtCO2 per year. This potential supply hinges on four primary categories: mitigating nature loss, encompassing efforts such as preventing deforestation; nature-based sequestration, such as reforestation initiatives; endeavors aimed at curtailing or diminishing emissions like methane from landfills; and the advancement of technology-driven methods to extract carbon dioxide directly from the atmosphere.
Restraints
Rapid Acceleration Required in Project Development
- Several obstacles pose challenges to fully harnessing and commercializing the projected potential supply of carbon credits. The rapid acceleration required in project development presents a formidable hurdle, demanding an unprecedented pace to effectively mobilize these initiatives. Additionally, the majority of the anticipated supply from avoided nature loss and nature-based sequestration is concentrated within a limited number of countries, potentially leading to logistical and geopolitical complexities. Each project carries inherent risks, and various types may struggle to secure financing due to prolonged periods between initial investment and eventual credit sales, hindering their viability.
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Carbon Credits Market Competitive Landscape
The competitive environment of the Global Carbon Credits Market is dynamic and characterized by the presence of a mix of well-established brands, emerging players, and niche producers. Innovation is a key competitive factor. Leading brands invest in research and development to introduce new flavors, packaging formats, and health-focused variations to cater to changing consumer preferences. They often set the trends in the industry.
Top Player’s Company Profiles
- 3Degrees Group, Inc.
- Carbon Care Asia Ltd.
- CarbonBetter
- ClearSky Climate Solutions
- EKI Energy Services Ltd.
- Finite Carbon
- Native Energy
- South Pole Group
- Torrent Power Ltd.
- WGL Holdings Inc.
- Tasman Environmental Markets
- Moss.Earth
- Climeco Llc
- Climetrek Ltd.
- Climatepartner Gmbh
- Climate Impact Partners
- Terrapass
- Carbon Credit Capital
- Bluesource Llc
- Carbonfund
Recent Developments
- On June 28, 2023, the Government of India's Ministry of Power formally launched the Carbon Credit Trading Scheme 2023, recognized alternatively as the carbon offsets initiative. This scheme marks a significant step in India's efforts to address environmental concerns and combat climate change by introducing a structured framework for trading carbon credits. The scheme aims to facilitate the reduction of greenhouse gas emissions by establishing a system where entities can trade carbon credits as a means to offset their emissions.
- On December 1, 2023, the World Bank unveiled ambitious initiatives aimed at fostering the expansion of high-integrity global carbon markets. This strategic move entails 15 countries benefiting from revenue generated through the sale of carbon credits derived from preserving their forests. The announcement signifies a concerted effort to incentivize countries for their conservation efforts, particularly in safeguarding forests that play a crucial role in sequestering carbon.
Carbon Credits Key Market Trends
- The Boston Consulting Group has taken a more reserved stance in its projections, anticipating a market size ranging between $10 billion to $40 billion by 2030. However, their outlook remains optimistic, anticipating a rapid surge in demand, supported by insights from a survey of business executives. This growth trajectory is propelled by several factors, including the increasing number of companies committed to achieving net-zero emissions targets, leading to amplified purchases of offsets to facilitate their attainment.
Carbon Credits Market SkyQuest Analysis
SkyQuest’s ABIRAW (Advanced Business Intelligence, Research & Analysis Wing) is our Business Information Services team that Collects, Collates, Correlates, and Analyses the Data collected by means of Primary Exploratory Research backed by robust Secondary Desk research.
Governments worldwide are increasingly turning to carbon trading as a pivotal strategy to curtail their emissions. The prevalence of market-based mechanisms for carbon mitigation has seen rapid growth post the 2015 Paris Agreement, with 73 national and sub-national jurisdictions collectively covering approximately 11.66 billion tonnes of CO2e emissions, accounting for around 23 percent of global greenhouse gas emissions. These strategies predominantly involve mechanisms like carbon pricing and cap-and-trade systems, which have been notably implemented in regions such as the EU, UK, Sweden, and China.
| Report Metric | Details |
|---|---|
| Market size value in 2022 | USD 2.2 billion |
| Market size value in 2031 | USD 69.88 billion |
| Growth Rate | 39.4% |
| Base year | 2023 |
| Forecast period | 2024-2031 |
| Forecast Unit (Value) | USD Billion |
| Segments covered |
|
| Regions covered | North America (US, Canada), Europe (Germany, France, United Kingdom, Italy, Spain, Rest of Europe), Asia Pacific (China, India, Japan, Rest of Asia-Pacific), Latin America (Brazil, Rest of Latin America), Middle East & Africa (South Africa, GCC Countries, Rest of MEA) |
| Companies covered |
|
| Customization scope | Free report customization with purchase. Customization includes:-
|
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Table Of Content
Executive Summary
Market overview
- Exhibit: Executive Summary – Chart on Market Overview
- Exhibit: Executive Summary – Data Table on Market Overview
- Exhibit: Executive Summary – Chart on Carbon Credits Market Characteristics
- Exhibit: Executive Summary – Chart on Market by Geography
- Exhibit: Executive Summary – Chart on Market Segmentation
- Exhibit: Executive Summary – Chart on Incremental Growth
- Exhibit: Executive Summary – Data Table on Incremental Growth
- Exhibit: Executive Summary – Chart on Vendor Market Positioning
Parent Market Analysis
Market overview
Market size
- Market Dynamics
- Exhibit: Impact analysis of DROC, 2021
- Drivers
- Opportunities
- Restraints
- Challenges
- Exhibit: Impact analysis of DROC, 2021
- SWOT Analysis
KEY MARKET INSIGHTS
- Technology Analysis
- (Exhibit: Data Table: Name of technology and details)
- Pricing Analysis
- (Exhibit: Data Table: Name of technology and pricing details)
- Supply Chain Analysis
- (Exhibit: Detailed Supply Chain Presentation)
- Value Chain Analysis
- (Exhibit: Detailed Value Chain Presentation)
- Ecosystem Of the Market
- Exhibit: Parent Market Ecosystem Market Analysis
- Exhibit: Market Characteristics of Parent Market
- IP Analysis
- (Exhibit: Data Table: Name of product/technology, patents filed, inventor/company name, acquiring firm)
- Trade Analysis
- (Exhibit: Data Table: Import and Export data details)
- Startup Analysis
- (Exhibit: Data Table: Emerging startups details)
- Raw Material Analysis
- (Exhibit: Data Table: Mapping of key raw materials)
- Innovation Matrix
- (Exhibit: Positioning Matrix: Mapping of new and existing technologies)
- Pipeline product Analysis
- (Exhibit: Data Table: Name of companies and pipeline products, regional mapping)
- Macroeconomic Indicators
COVID IMPACT
- Introduction
- Impact On Economy—scenario Assessment
- Exhibit: Data on GDP - Year-over-year growth 2016-2022 (%)
- Revised Market Size
- Exhibit: Data Table on Carbon Credits Market size and forecast 2021-2027 ($ million)
- Impact Of COVID On Key Segments
- Exhibit: Data Table on Segment Market size and forecast 2021-2027 ($ million)
- COVID Strategies By Company
- Exhibit: Analysis on key strategies adopted by companies
MARKET DYNAMICS & OUTLOOK
- Market Dynamics
- Exhibit: Impact analysis of DROC, 2021
- Drivers
- Opportunities
- Restraints
- Challenges
- Exhibit: Impact analysis of DROC, 2021
- Regulatory Landscape
- Exhibit: Data Table on regulation from different region
- SWOT Analysis
- Porters Analysis
- Competitive rivalry
- Exhibit: Competitive rivalry Impact of key factors, 2021
- Threat of substitute products
- Exhibit: Threat of Substitute Products Impact of key factors, 2021
- Bargaining power of buyers
- Exhibit: buyers bargaining power Impact of key factors, 2021
- Threat of new entrants
- Exhibit: Threat of new entrants Impact of key factors, 2021
- Bargaining power of suppliers
- Exhibit: Threat of suppliers bargaining power Impact of key factors, 2021
- Competitive rivalry
- Skyquest special insights on future disruptions
- Political Impact
- Economic impact
- Social Impact
- Technical Impact
- Environmental Impact
- Legal Impact
Market Size by Region
- Chart on Market share by geography 2021-2027 (%)
- Data Table on Market share by geography 2021-2027(%)
- North America
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- USA
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Canada
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Europe
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- Germany
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Spain
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- France
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- UK
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of Europe
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Asia Pacific
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- China
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- India
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Japan
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- South Korea
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of Asia Pacific
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Latin America
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- Brazil
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of South America
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Middle East & Africa (MEA)
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- GCC Countries
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- South Africa
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of MEA
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
KEY COMPANY PROFILES
- Competitive Landscape
- Total number of companies covered
- Exhibit: companies covered in the report, 2021
- Top companies market positioning
- Exhibit: company positioning matrix, 2021
- Top companies market Share
- Exhibit: Pie chart analysis on company market share, 2021(%)
- Total number of companies covered
Methodology
For the Carbon Credits Market, our research methodology involved a mixture of primary and secondary data sources. Key steps involved in the research process are listed below:
1. Information Procurement: This stage involved the procurement of Market data or related information via primary and secondary sources. The various secondary sources used included various company websites, annual reports, trade databases, and paid databases such as Hoover's, Bloomberg Business, Factiva, and Avention. Our team did 45 primary interactions Globally which included several stakeholders such as manufacturers, customers, key opinion leaders, etc. Overall, information procurement was one of the most extensive stages in our research process.
2. Information Analysis: This step involved triangulation of data through bottom-up and top-down approaches to estimate and validate the total size and future estimate of the Carbon Credits Market.
3. Report Formulation: The final step entailed the placement of data points in appropriate Market spaces in an attempt to deduce viable conclusions.
4. Validation & Publishing: Validation is the most important step in the process. Validation & re-validation via an intricately designed process helped us finalize data points to be used for final calculations. The final Market estimates and forecasts were then aligned and sent to our panel of industry experts for validation of data. Once the validation was done the report was sent to our Quality Assurance team to ensure adherence to style guides, consistency & design.
Analyst Support
Customization Options
With the given market data, our dedicated team of analysts can offer you the following customization options are available for the Carbon Credits Market:
Product Analysis: Product matrix, which offers a detailed comparison of the product portfolio of companies.
Regional Analysis: Further analysis of the Carbon Credits Market for additional countries.
Competitive Analysis: Detailed analysis and profiling of additional Market players & comparative analysis of competitive products.
Go to Market Strategy: Find the high-growth channels to invest your marketing efforts and increase your customer base.
Innovation Mapping: Identify racial solutions and innovation, connected to deep ecosystems of innovators, start-ups, academics, and strategic partners.
Category Intelligence: Customized intelligence that is relevant to their supply Markets will enable them to make smarter sourcing decisions and improve their category management.
Public Company Transcript Analysis: To improve the investment performance by generating new alpha and making better-informed decisions.
Social Media Listening: To analyze the conversations and trends happening not just around your brand, but around your industry as a whole, and use those insights to make better Marketing decisions.
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