Carbon Credits Market Expected to Reach $143.5 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Carbon Credits Market," The carbon credits market size 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 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 forecast 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 carbon credits market 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 carbon credits market analysis in terms of 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.