Carbon Credits Market Size
Carbon Credits Market Size was valued at USD 550.1 Billion in 2024 and is expected to reach USD 2436.2 Billion by 2034 growing at a CAGR of 17.8%
A carbon credit is a tradable certificate or permit that represents the right to emit one ton of CO2 or the equivalent of greenhouse gasses. These credits are part of international efforts to mitigate climate change by restricting total GHG emissions and relying on market mechanisms to encourage Transportation and Energy processes toward lower-emitting paths. Companies or governments are assigned a particular number of credits that they must have to offset their emissions. When they emit less than their allocated amount, they can sell the leftover credits to others in need. This provides a financial incentive for an entity to minimize its carbon emissions since it creates a profit opportunity if the surplus credits go unsold. It is produced by a variety of programs that decrease, eliminate, or remove greenhouse gases from the atmosphere, including reforestation, renewable energy installations, and energy efficiency improvements. Carbon credits then become crucial to both cap-and-trade regimes and voluntary carbon markets aimed at combating climate change. Carbon credits have several applications and benefits in preventing climate change. Perhaps the most important application is in cap-and-trade systems, which provide an absolute limit on emissions by establishing a cap and allowing credits to be traded between different entities to achieve cost-effective reductions. It pushes businesses to innovate and reduce their emissions so that they may sell their extra credits at a greater price.