Carbon Offset/Carbon Credit Market

Market Overview

The Carbon Offset/Carbon Credit Market has witnessed remarkable growth driven by increasing global awareness of the urgent need to address climate change. Businesses, governments, and individuals are actively seeking to mitigate their carbon footprints by investing in carbon offset initiatives. These programs, which offer a means to counterbalance unavoidable emissions, have gained prominence across various industries, particularly in sectors such as aviation, shipping, and heavy manufacturing. The market has expanded as more entities aim to achieve net-zero or carbon neutrality objectives, spurring the demand for carbon credits generated from verified and certified carbon offset projects. These credits represent emissions reductions or removals and provide essential support to projects directly contributing to climate change mitigation. As sustainability remains a paramount concern, the carbon offset market continues to evolve and play a pivotal role in the global response to climate challenges.

In 2021, the Intergovernmental Panel on Climate Change (IPCC) issued an updated assessment of the global efforts to mitigate climate change. The concerning aspect of the report is that greenhouse gas (GHG) emissions continue to increase in all major sectors on a global scale, albeit at a reduced rate. However, there is a positive development to highlight: renewable energy sources have become increasingly cost-effective, often surpassing the affordability of traditional fossil fuels such as coal, oil, and gas. Thus the growth for the Carbon Offset/Carbon Credit Market is increases.

Carbon Offset/Carbon Credit Market Size

Report	Details
Market Size Value	USD 413.7 billion in 2024
Market Size Value	USD 4,765.3 billion by 2032
CAGR	31.20%
Forecast Period	2024-2032
Base Year	2023
Historic Data	2020
Segments Covered	Type, Project Type, End User and Region
Geographics Covered	North America, Europe, Asia Pacific, and RoW

Major Players In Carbon Offset/Carbon Credit Market Include: South Pole Group, 3Degree, Finite Carbon, EKI Energy Services Ltd, and Native Energy, CarbonBetter, Carbon Care Asia Limited, Terrapass, Climetrek Ltd, Carbon Credit Capital, Natureoffice GmbH, Climate Partner GmbH, Climate Trade, ForestCarbon, Moss.Earth, Bluesource LLC, TEM (Tasman Environmental Markets), Climate Impact Partners, Carbonfund, Climeco LLC, and Others.

Pursuit of Net-Zero and Carbon Neutrality Objectives

Entities, be they corporations, governments, or individuals, in pursuit of net-zero or carbon neutrality goals, are actively seeking to balance their remaining emissions by investing in carbon offset initiatives. This heightened demand for carbon offsets is a key driver behind the expansion of the carbon offset market. To attain net-zero or carbon neutrality status, stakeholders procure carbon credits sourced from rigorously verified and certified carbon offset projects. These credits signify reductions or removals of emissions and the funds spent on them support projects directly contributing to climate change mitigation. Businesses and governments worldwide are striving to achieve net-zero emissions, a state where the amount of greenhouse gases removed from the atmosphere is equal to the amount released. Carbon offsets play a crucial role in achieving these ambitious goals by enabling companies and organizations to neutralize emissions that cannot be eliminated through other means. As the pursuit of net-zero and carbon neutrality objectives intensifies, demand for carbon offsets is expected to surge, driving growth in the carbon offset market.

Market Dynamics

Drivers:

• Increasing Emphasis on Sustainability
• Rising Demand From Corporations And Governments
• Growing adoption of carbon pricing regulations

Opportunities:

• Developing new and innovative carbon offset projects
• Promoting the development of carbon markets in developing countries

Increasing Demand For High-Quality Carbon Offsets

The demand for high-quality carbon offsets is on the rise as businesses and organizations strive to achieve net-zero emissions targets and demonstrate their commitment to environmental stewardship. Buyers are becoming more discerning, seeking offsets that are verifiable, transparent, and impactful, ensuring that their investments in carbon mitigation are truly making a difference. This growing demand is driving the development of stricter standards and protocols for carbon offset projects, leading to a more robust and credible carbon offset market. Additionally, the focus on nature-based solutions, such as forestry and land use projects, is gaining traction due to their multiple benefits beyond carbon sequestration, including biodiversity conservation and community development. As businesses and organizations prioritize high-quality carbon offsets, the market is expected to evolve and mature, playing an increasingly significant role in addressing climate change.

The Market For Carbon Offset/Carbon Credit Market Is Dominated By North America.

The Asia-Pacific region is rapidly emerging as a key driver in the global Carbon Offset/Carbon Credit Market. Many Asia-Pacific countries have set ambitious climate goals, such as achieving net-zero emissions by 2050. This is creating a strong demand for carbon offsets, as companies and governments seek to neutralize emissions that cannot be eliminated through other means.

The Asia-Pacific region is home to some of the fastest-growing economies in the world. This is leading to an increase in greenhouse gas emissions, but it is also creating opportunities for carbon offset projects. The Asia-Pacific region is rich in natural resources, such as forests and agricultural land. This provides a strong foundation for the development of nature-based carbon offset projects. Many Asia-Pacific governments are supportive of the development of the carbon offset market. They are providing financial incentives and developing regulations to encourage the development of carbon offset projects.

India is another major player in the carbon offset market. The Indian government has set a goal of achieving 40% of its electricity from renewable sources by 2030. It is also developing a national carbon trading scheme, which is expected to boost demand for carbon offsets. Japan is a leader in carbon capture and storage (CCS) technology. CCS is a promising technology that can be used to capture and store carbon dioxide emissions from power plants and other industrial facilities. Japan is investing heavily in CCS projects, and it is expected to be a major supplier of carbon offsets in the future.

Compliance Segment Is Anticipated To Hold The Largest Market Share During The Forecast Period

Based on type the carbon offset/carbon credit market is segmented into Voluntary Market and Compliance Market. The Compliance carbon offset market is currently the largest segment of the carbon offset market. Carbon pricing regulations, such as cap-and-trade programs, are becoming increasingly widespread, creating a growing demand for carbon offsets to comply with emission reduction targets. Carbon markets in compliance segments are maturing and expanding, providing a more robust and liquid market for carbon offset transactions. The stringency of emissions reduction targets is increasing globally, driving demand for carbon offsets to supplement emission reductions achieved through other means.

Major Segmentations Are Distributed as follows:

• By Type
  • Voluntary Market
  • Compliance Market
• By Project Type
  • Avoidance/Reduction projects
  • Removal/Sequestration projects
    • Nature-based
    • Technology-based
• By End-user
  • Power
  • Energy
  • Transportation
  • Industrial
  • Others
• By Region
  • North America
    • US
    • Canada
  • Latin America
    • Brazil
    • Mexico
    • Argentina
    • Colombia
    • Chile
    • Peru
    • Rest of Latin America
  • Europe
    • Germany
    • France
    • Italy
    • Spain
    • U.K.
    • BENELUX
    • CIS & Russia
    • Nordics
    • Austria
    • Poland
    • Rest of Europe
  • Asia Pacific
    • China
    • Japan
    • South Korea
    • India
    • Thailand
    • Indonesia
    • Malaysia
    • Vietnam
    • Australia & New Zealand
    • Rest of Asia Pacific
  • Middle East & Africa
    • Saudi Arabia
    • UAE
    • South Africa
    • Nigeria
    • Egypt
    • Israel
    • Turkey
    • Rest of MEA

Recent Developments

• In November 2022, 3Degrees has entered into a strategic partnership with Merge Electric Fleet Solutions, aimed at delivering valuable insights and leveraging their extensive experience to serve both current and prospective fleet clients. Within clean fuel states such as California, Oregon, and Washington, 3Degrees will commercialize Merge's charging solutions and ensure that all electric vehicle (EV) charging operations are offset with Renewable Energy Certificates (RECs).
• In August 2022, Johnson Controls and 3Degrees have joined forces to expedite progress towards achieving net-zero carbon emissions. Their collaboration is designed to expedite the journey to net zero by providing a range of carbon reduction services.

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• What are the dominant revenue-generating regions for Carbon Offset/Carbon Credit Market, as well as regional growth trends?
• By the end of the forecast period, what will the market size and growth rate be?
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