Carbon Credits Market Size, Share, By Type (Compliance Market and Voluntary Market), By Project Type (Renewable Energy, Energy Efficiency, Forestry, and Others), By End-Use (Power, Energy, Transportation, and Others), and By Region - Trends, Analysis, and Forecast till 2034

• The carbon credits market size was valued at USD 550.1 billion in 2024.
• The market is attributed to be valued at USD 2436.2 billion by 2034.
• The market is projected to grow at a CAGR of 17.8%.

Carbon credits are permits that allow the owner to emit a certain amount of carbon dioxide or other greenhouse gases (GHGs). One credit permits one ton of carbon dioxide or other greenhouse gas emissions. Other associated terminologies are carbon offsetting or carbon credits. Carbon credits represent half of the cap-and-trade program. Companies that are big emitters are lavished with credits to be in a position to continue polluting up to a particular degree, which periodically declines. The rising imposition of strict regulations to augment market growth.

Key Takeaways:

• North America is expected to lead the market during the forecast period due to the presence of many renewables energy and forestry projects.
• Asia Pacific is projected to witness fastest growth due to the improved awareness related to environment.

                             To Know More, Request Free Sample Report

Key Drivers of Target Market:

Stringent Regulations to Augment Market Growth

• Governments all over the world are imposing more stringent regulations to reduce greenhouse gas emissions. Compliance markets are an outcome of such regulations, wherein companies that emit more than their limits have to compulsorily buy carbon credits from those that have kept their emissions below their limits. In years to come, this policy approach is going to become more widespread and drive great demand for carbon credits.

Increased Project Development to Propel Market Expansion

• The incentive to develop projects that generate credits increased with rising demand for carbon credits. Such projects include forestry. For instance, reforestation initiatives and sustainable management of forests, including energy efficiency projects. Not only do these projects generate carbon credits, but they also help deliver broader environmental benefits like cleaner air quality, biodiversity conservation, and reduced pollution.

Restraints:

Lack of Standardization May Impede Market Growth

• At this point, a uniform and globally accepted standard for credit verification and quantification remains absent. There is, therefore, an incoherence between credits from different projects and parts of the world, generally raising comparability problems regarding credits of different origins. This could confuse the buyers, undermine price discovery within the market, and discourage investment because it is keenly aware of the uncertainties of credit quality. There are efforts in the pipeline for more harmonized standards, but there are always problems encountered when it is applied globally.

Opportunities:

Accelerated Emission Reductions May Provide Better Opportunities in the Future

• The trading market can be called a value addition in terms of finance to companies and organizations through projects with reduced GHG emissions emanating from them. This will accelerate the achievement of mitigation goals on climate change. A carbon price fed by the market urges imposition to adopt cleaner technologies, increase energy efficiency measures, and reduce environmental footprints. This can be translated to millions of tons of reductions in CO2 a year at the global level, mitigating the worst effects of climate change, such as sea-level rise and extreme weather events, and disrupting ecosystems.

The carbon credits market is segmented into type, project type, end-user, and region.

Type:

By type, the market is classified into compliance market and voluntary market. The compliance market segment is expected to hold the largest carbon credits market share owing toe imposition of so-called regulated national, regional, and carbon reduction regimes.

Project Type:

Based on project type, the market is divided into renewable energy, energy efficiency, forestry, and others. The renewable energy segment is leading the market. The growth is attributed to the benefits, such as emissions reductions, and others.

End-User:

On the basis of end-user, the market is divided into power, energy, transportation, and others. The power segment is holding the largest market share as the carbon credits produce power with less amount of carbon reducing emissions.

Regional Insights:

Based on geography, the carbon credits market is studied across North America, Asia Pacific, Europe, Latin America, and the Middle East & Africa.

• North America: Carbon markets in North America, especially the United States and Canada, are very active and primarily driven by regional initiatives, such as California's Cap-and-Trade Program and carbon pricing policies in all provinces in Canada. Hundreds of renewable energy and forestry projects in the region generate carbon credits. Both compliance and voluntary markets in which parties take part reflect not only corporate social responsibility but also regulatory needs.
• Asia Pacific: The Asia Pacific countries, in a way like China, India, and Australia, are coming up with an emerging carbon credits market due to enhanced awareness regarding the environment and considerable policies from the government. This also includes the initiation of a national carbon market by none other than China, to reduce its emissions. There is no lack of potential in the region concerning renewable energy, with numerous solar, wind, and hydro projects producing carbon credits. The importance of forestry and land-use projects also seems to be quite important.

Carbon Credits Market Report Scope:

Segmentation

By Type:

• Compliance Market
• Voluntary Market

By Project Type:

• Renewable Energy
• Energy Efficiency
• Forestry
• Others

By End-User:

• Power
• Energy
• Transportation
• Others

By Region:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Russia
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • Israel
  • South Africa
  • Rest of Middle East & Africa

The major players operating in the carbon credits market are The Carbon Trust, South Pole, Climate Impact Partners, and others. These key players in the market are launching new products to sustain their position in the market during their forecast period.

List of Key Players in the Market:

• The Carbon Trust*
• Climate Impact Partners
• South Pole
• 3Degrees
• VERRA
• TerraPass
• CarbonClear
• PwC
• EcoAct
• ClimeCo
• Ecosecurities
• ALLCOT
• Atmosfair
• The Carbon Collective Company
• Sterling Planet Inc
• WGL Holdings, Inc.
• Green Mountain Energy Company

                     To Access More Companies, Download Free Sample PDF

• In March 2024, CFC enters the carbon insurance market with a new product. CFC, a specialist insurance provider, has announced its debut in the carbon insurance market by launching a "groundbreaking" new product. According to reports, Carbon Delivery Insurance is the first to cover both the physical and political risks that businesses encounter when purchasing voluntary carbon credits in advance. Carbon Delivery Insurance, according to CFC, protects the entire purchaser's investment if carbon credits are not delivered.
• In January 2024, Loam Bio, a carbon technologies leader, announced new opportunities for the United States. Novel biology creates steady carbon levels in soil and enhances carbon credit. R.O.I. Loam Bio, an Australian leader in carbon market technologies, has announced its entry and product offering in the U.S. CarbonBuilder, the company's pioneering microbial technology, increases stable carbon in the soil, allowing farmers to access carbon markets via the company's carbon program, SecondCrop, without the initial risk of major practice change.

More Related Reports

Carbon Black Market
Activated Carbon market
Renewable Energy Market
Cloud Computing in Energy Market
Distributed energy generation market