The global carbon credits market is anticipated to reach $143.53 Billion by 2032, growing from $2.00 Billion in 2022 at a CAGR of 55.5% from 2023 to 2032. Carbon credits can be traded and exchanged in carbon markets. There are two main types of carbon credits market namely voluntary and regulatory. These markets operate under government-regulated systems, such as the European Union Emissions Trading System (EU ETS). Companies that have emission reduction obligations must purchase enough carbon credits to cover their emissions. If they exceed their allocated emission limit, they tend to face penalties.
Several initiatives taken by various countries to lower the emission of greenhouse gases and to achieve net zero carbon neutrality is driving the demand for the carbon credits market. In this market, each carbon credit is assigned a unique identification number to track ownership and prevent double-counting. The emission of greenhouse gases need to be reduced to address the rising environmental issues such as floods, droughts, melting glaciers, earthquakes, and others. Carbon credits help to slow down carbon emissions, however some emissions are unavoidable. In such cases, the carbon credits are utilized to compensate or neutralize the carbon emissions to balance the amount of carbon dioxide emitted into the environment. Also, carbon credits give businesses the chance to reduce their future emissions through asset turnover and the development of their business models, as well as the option to offset their current emissions. Many private businesses voluntarily participate in the carbon credits market as a part of their corporate social responsibility (CSR) activities. Carbon credits are usually generated via forestry or agricultural practices.
However, the cost of carbon credits vary based on regions and countries. For instance, in Brazil, the cost of 1 carbon credit is around $411.36 (R$2000). Thus, the market may face challenges due to the rising cost of carbon credits. Also, carbon credits do not represent actual carbon emission reductions by the company or an individual. This is because maintaining the credibility and integrity of carbon credits needs proper reporting, monitoring which is not present at the moment. These factors are projected to hamper the market revenue growth in the upcoming years.
The collective actions and co-operation across several countries to combat the climate change is anticipated to boost the carbon credits market growth in the upcoming years. For instance, in February 2023, India announced investments and list of activities that can help in achieving environmental sustainability. For instance, under these activities, the Indian government has considered the trading of carbon credits under Article 6 of the Paris Agreement in the international market. The wish list of areas from where India would attract investments in carbon credits Include renewable energy generation such as green hydrogen, thermal power, off-shore wind, compressed biogas, carbon capture and storage, and other carbon removal & mitigation activities. Also, on June 8, 2023, the World Bank’s insurance arm named the Multilateral Investment Guarantee Agency (MIGA) has planned to provide insurance cover for carbon credits projects that will attract large-scale investments across the countries that are major carbon-emitters. This will also help in regulating the trade of carbon credits. These aspects are anticipated to boost the carbon credits market size during the forecast period.
The COVID-19 pandemic has had significant impact on the market for carbon credits. Numerous projects that help in reducing the carbon emissions were halted as a result of the pandemic. Projects were delayed or cancelled due to travel restrictions, supply chain disruptions, and financial limitations. This consequently had an impact on the creation of new carbon credits and decreased their marketability. The demand for carbon credits was impacted by the economic downturn brought on by the pandemic. Businesses that are experiencing financial difficulties and declining revenues may have reduced their voluntary carbon offsetting efforts. In addition, some businesses put short-term financial viability ahead of long-term sustainability objectives, which led to a decline in the demand for carbon credits in some industries.
The key players profiled in this report Include South Pole, 3Degrees, EKI Energy Services Ltd, TerraPass, NATUREOFFICE, Moss.Earth, Climate Impact Partners, Carbon Credit Capital, LLC, CarbonBetter, and NativeEnergy. The market players are continuously endeavoring to have a dominant position in this competitive market by using strategies such as collaborations and acquisitions.
Several initiatives taken by various countries to lower the emission of greenhouse gases and to achieve net zero carbon neutrality is driving the demand for the carbon credits market. In this market, each carbon credit is assigned a unique identification number to track ownership and prevent double-counting. The emission of greenhouse gases need to be reduced to address the rising environmental issues such as floods, droughts, melting glaciers, earthquakes, and others. Carbon credits help to slow down carbon emissions, however some emissions are unavoidable. In such cases, the carbon credits are utilized to compensate or neutralize the carbon emissions to balance the amount of carbon dioxide emitted into the environment. Also, carbon credits give businesses the chance to reduce their future emissions through asset turnover and the development of their business models, as well as the option to offset their current emissions. Many private businesses voluntarily participate in the carbon credits market as a part of their corporate social responsibility (CSR) activities. Carbon credits are usually generated via forestry or agricultural practices.
However, the cost of carbon credits vary based on regions and countries. For instance, in Brazil, the cost of 1 carbon credit is around $411.36 (R$2000). Thus, the market may face challenges due to the rising cost of carbon credits. Also, carbon credits do not represent actual carbon emission reductions by the company or an individual. This is because maintaining the credibility and integrity of carbon credits needs proper reporting, monitoring which is not present at the moment. These factors are projected to hamper the market revenue growth in the upcoming years.
The collective actions and co-operation across several countries to combat the climate change is anticipated to boost the carbon credits market growth in the upcoming years. For instance, in February 2023, India announced investments and list of activities that can help in achieving environmental sustainability. For instance, under these activities, the Indian government has considered the trading of carbon credits under Article 6 of the Paris Agreement in the international market. The wish list of areas from where India would attract investments in carbon credits Include renewable energy generation such as green hydrogen, thermal power, off-shore wind, compressed biogas, carbon capture and storage, and other carbon removal & mitigation activities. Also, on June 8, 2023, the World Bank’s insurance arm named the Multilateral Investment Guarantee Agency (MIGA) has planned to provide insurance cover for carbon credits projects that will attract large-scale investments across the countries that are major carbon-emitters. This will also help in regulating the trade of carbon credits. These aspects are anticipated to boost the carbon credits market size during the forecast period.
The COVID-19 pandemic has had significant impact on the market for carbon credits. Numerous projects that help in reducing the carbon emissions were halted as a result of the pandemic. Projects were delayed or cancelled due to travel restrictions, supply chain disruptions, and financial limitations. This consequently had an impact on the creation of new carbon credits and decreased their marketability. The demand for carbon credits was impacted by the economic downturn brought on by the pandemic. Businesses that are experiencing financial difficulties and declining revenues may have reduced their voluntary carbon offsetting efforts. In addition, some businesses put short-term financial viability ahead of long-term sustainability objectives, which led to a decline in the demand for carbon credits in some industries.
The key players profiled in this report Include South Pole, 3Degrees, EKI Energy Services Ltd, TerraPass, NATUREOFFICE, Moss.Earth, Climate Impact Partners, Carbon Credit Capital, LLC, CarbonBetter, and NativeEnergy. The market players are continuously endeavoring to have a dominant position in this competitive market by using strategies such as collaborations and acquisitions.
Key Benefits For Stakeholders
- This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the carbon credits market analysis from 2022 to 2032 to identify the prevailing carbon credits market opportunities.
- The market research is offered along with information related to key drivers, restraints, and opportunities.
- Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
- In-depth analysis of the carbon credits market segmentation assists to determine the prevailing market opportunities.
- Major countries in each region are mapped according to their revenue contribution to the global market.
- Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
- The report Includes the analysis of the regional as well as global carbon credits market trends, key players, market segments, application areas, and market growth strategies.
Key Market Segments
By Type
- Regulatory
- Voluntary
By System
- Cap-and-Trade
- Baseline-and-Credit
- Aviation
- Energy
- Industrial
- Petrochemical
- Others
By Region
- North America
- U.S.
- Canada
- Mexico
- Europe
- Germany
- UK
- France
- Turkey
- Russia
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- South Korea
- Australia
- Rest of Asia-Pacific
- LAMEA
- Brazil
- UAE
- Saudi Arabia
- South Africa
- Rest of LAMEA
Key Market Players
- 3Degrees
- CarbonBetter
- Carbon Credit Capital, LLC.
- Climate Impact Partners
- EKI Energy Services Ltd.
- Moss.Earth
- NativeEnergy
- NATUREOFFICE
- South Pole
- TerraPass
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Table of Contents
CHAPTER 1: INTRODUCTION
CHAPTER 2: EXECUTIVE SUMMARY
CHAPTER 3: MARKET OVERVIEW
CHAPTER 4: CARBON CREDITS MARKET, BY TYPE
CHAPTER 5: CARBON CREDITS MARKET, BY SYSTEM
CHAPTER 6: CARBON CREDITS MARKET, BY END-USE INDUSTRY
CHAPTER 7: CARBON CREDITS MARKET, BY REGION
CHAPTER 8: COMPETITIVE LANDSCAPE
CHAPTER 9: COMPANY PROFILES
List of Tables
List of Figures
Executive Summary
According to a new report, titled, 'Carbon Credits Market,' The carbon credits market was valued at $2 billion in 2022, and is estimated to reach $143.5 billion by 2032, growing at a CAGR of 55.5% from 2023 to 2032. Carbon credits can be bought and sold in carbon markets. Buyers, such as companies, governments, or individuals, purchase carbon credits to offset their own emissions and meet their sustainability goals. The carbon credits are transferred from the seller to the buyer, often facilitated through specialized platforms or exchanges. Carbon credits help the companies to minimize their greenhouse gas emissions.In order to meet the net-zero carbon emissions, it is necessary to lower the greenhouse gas emissions to almost 50% by 2030 and to reduce to net zero by 200. Thus, purchasing carbon credits can help in addressing huge amount of greenhouse gas emissions. Carbon credits are basically the certificates that represents the amount of greenhouse gases removed from the atmosphere. In addition, participating in voluntary carbon credit markets enables companies to showcase climate leadership and demonstrate their commitment to addressing climate change. This involvement often goes beyond basic compliance requirements, as companies voluntarily take additional measures to reduce their emissions and support emission reduction projects. Such initiatives can drive innovation in clean technologies and sustainable practices. These factors are anticipated to drive the carbon credits market share in the upcoming years.
However, some of the disadvantages of carbon credit can be subject to significant price volatility, influenced by factors such as policy changes, market speculation, and economic conditions. This volatility can create uncertainty for market participants, making it challenging to plan and implement long-term emission reduction strategies. This is one of the major factors predicted to hamper the market revenue growth during the forecast period.
An increase in the number of public and private organizations that help in achieving environmental sustainability by trading carbon credits is anticipated to boost the market demand during the forecast period. An international framework for trading in greenhouse gas emission reductions was established by IETA. Leading international corporations from every phase of the carbon trading cycle are currently members of International Emissions Trading Association (IETA). The organization is a pioneer in advancing market-based approaches to combating climate change and offers reliable data on market activity and the trading of greenhouse gas emissions.
The carbon credits market share is segmented on the basis of type, system, end-use industry, and region. By type, it is classified into regulatory and voluntary. By system, it is classified into cap-and-trade and baseline-and-credit. By end-use industry, it is classified into aviation, energy, industrial, petrochemical, and others. By region, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
The key players profiled in the carbon credits market report include South Pole, 3Degrees, EKI Energy Services Ltd, TerraPass, NATUREOFFICE, Moss.Earth, Climate Impact Partners, Carbon Credit Capital, LLC, CarbonBetter, and NativeEnergy.
The report offers a comprehensive analysis of the global carbon credits market trends by thoroughly studying different aspects of the market including major segments, market statistics, market dynamics, regional market outlook, investment opportunities, and top players working towards the growth of the market. The report also highlights the present scenario and upcoming trends & developments that are contributing toward the growth of the market. Moreover, restraints and challenges that hold power to obstruct the market growth are also profiled in the report along with the Porter’s five forces analysis of the market to elucidate factors such as competitive landscape, bargaining power of buyers and suppliers, threats of new players, and emergence of substitutes in the market.
Impact of COVID-19 on the Global Carbon Credits Industry
The carbon credits market was negatively impacted by the COVID-19 pandemic, owing to economic crisis across several countries, travel restrictions, closure of manufacturing units, and reduced energy consumption.The carbon credits sector is largely monitored by the governments across several countries. The carbon credits market opportunities were hampered during the pandemic due to reduced investments on emission reduction projects such as carbon sustainability projects and renewable energy projects.
Also, budget constraints and tendency towards cash-saving have restrained many small & medium-sized companies to purchase carbon credits. Furthermore, uncertainties and fluctuations in the energy prices and economic recovery initiatives have led to further disruptions in the carbon credits sector.
Key Findings of the Study
- Based on type, the regulatory sub-segment emerged as the global leader in 2022 and the voluntary sub-segment anticipated to be the fastest growing during the forecast period.
- Based on system, the cap-and-trade sub-segment emerged as the global leader in 2022 and the baseline-and-credit is predicted to show the fastest growth in the upcoming years.
- Based on end-use industry, the industrial sub-segment emerged as the global leader in 2022 and is predicted to show the fastest growth in the upcoming years.
- Based on region, the Asia-Pacific market registered the highest market share in 2022 and is projected to maintain its position during the forecast period.
Companies Mentioned
- 3Degrees
- CarbonBetter
- Carbon Credit Capital, LLC.
- Climate Impact Partners
- EKI Energy Services Ltd.
- Moss.Earth
- NativeEnergy
- NATUREOFFICE
- South Pole
- TerraPass
Methodology
The analyst offers exhaustive research and analysis based on a wide variety of factual inputs, which largely include interviews with industry participants, reliable statistics, and regional intelligence. The in-house industry experts play an instrumental role in designing analytic tools and models, tailored to the requirements of a particular industry segment. The primary research efforts include reaching out participants through mail, tele-conversations, referrals, professional networks, and face-to-face interactions.
They are also in professional corporate relations with various companies that allow them greater flexibility for reaching out to industry participants and commentators for interviews and discussions.
They also refer to a broad array of industry sources for their secondary research, which typically include; however, not limited to:
- Company SEC filings, annual reports, company websites, broker & financial reports, and investor presentations for competitive scenario and shape of the industry
- Scientific and technical writings for product information and related preemptions
- Regional government and statistical databases for macro analysis
- Authentic news articles and other related releases for market evaluation
- Internal and external proprietary databases, key market indicators, and relevant press releases for market estimates and forecast
Furthermore, the accuracy of the data will be analyzed and validated by conducting additional primaries with various industry experts and KOLs. They also provide robust post-sales support to clients.
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