Global Carbon Credit Market is Expected to be Propelled by Growing Adoption of Carbon Neutrality Initiatives

Global Carbon Credit Market


 The carbon credit market allows companies and governments to offset their carbon emissions by purchasing credits that represent verifiable reductions of greenhouse gases made by other organizations. Carbon credits are issued by governments or independent entities for every ton of carbon dioxide or its equivalent that is reduced, avoided, or absorbed. They provide an alternative to directly reducing emissions and help lower the overall cost of compliance with regulations around emission caps or carbon pricing policies. Common sources of credits include energy efficiency projects, renewable energy projects, waste management programs, and forestry/land-use projects.

The global carbon credit market is estimated to be valued at US$ 31.54 billion in 2023 and is expected to exhibit a CAGR of 3.0% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

The global carbon credit market is driven by the growing adoption of carbon neutrality initiatives by corporations and governments worldwide. Many countries have pledged to achieve net-zero emissions by 2050 which is spurring investments in offsets. Over 1,600 companies globally have now committed to using internal carbon pricing to help cut emissions and prepare for regulation. Major emitters like aviation and shipping are also exploring the potential of offsets to meet their climate goals. With additional policy support and projects in the pipeline, the carbon credit market is positioned for steady growth over the coming decade.

Market Dynamics:
The market is primarily propelled by growing adoption of carbon neutrality initiatives as discussed in the heading. Corporates and governments worldwide are now pledging to achieve net-zero emissions by mid-century in line with the Paris Agreement goals. This is creating significant demand for high-quality offsets that allow actors to neutralize hard-to-abate residual emissions through credits. Another driver is the potential introduction of domestic carbon pricing policies in large emitting nations like China, India and Indonesia. If implemented, these policies will incentivize local investments in clean projects generating tradeable offsets internationally. While supply is rising to match demand, ensuring offsets represent real, verifiable and additional emissions reductions remains important to maintain environmental integrity and avoid potential supply bottlenecks in the future.


Segment Analysis

The global carbon credit market is dominated by the compliance segment. Within the compliance segment, the large EU Emissions Trading Scheme constitutes over 80% of the global cap and trade carbon market. The EU ETS covers over 11,000 heavy energy-using installations in the power sector and energy-intensive industrial sectors which are responsible for close to 50% of total EU greenhouse gas emissions. Industrial facilities in these sectors receive or buy emission allowances, each allowing emission of 1 tonne of carbon dioxide equivalents.

Pest Analysis

Political: Many nations have committed to achieve net zero emissions by 2050 through their NDCs, driving growth of the carbon credit market. The EU has implemented stricter emissions cap under phase IV of its emission trading scheme to reduce emissions faster.

Economic: Transition to a low carbon economy will require huge investments estimated to be over $100 trillion by 2050. Carbon credits provide an economically efficient way for industries and nations to meet their commitments in a cost effective manner.

Social: Rising awareness about climate change is pushing corporates and individuals to reduce their carbon footprint and net zero goals are increasingly becoming an important part of ESG strategies.

Technological: Advancements in renewable energy, energy storage and carbon capture technologies will help reduce abatement costs and make low carbon options more economically viable compared to high carbon options. This will also reduce demand for carbon offsets over the long term.

Key Takeaways

The Global Carbon Credit Market Share is expected to witness high growth over the forecast period driven by stricter national commitments to reduce emissions and transition to clean energy. The compliance segment dominates currently led by the large and established EU Emissions Trading Scheme. The global carbon credit market is estimated to be valued at US$ 31.54 billion in 2023 and is expected to exhibit a CAGR of 3.0% over the forecast period 2023 to 2030.

Regional analysis: The European region currently dominates the carbon credit market led by EU ETS. However, China and other developing Asian markets are expected to drive future growth in the market as they strengthen climate policies and carbon market mechanisms to achieve their NDC targets.

Key players: Key players operating in the global carbon credit market are South Pole, 3Degrees, Indigo Carbon, Carbon Clear, Terra Pass, Green Mountain Energy, Schneider Electric, DuPont, and Bioassets. South Pole is one of the largest independent carbon credit developers and intermediaries globally.

For more details on the report, Read- https://www.pressreleasebulletin.com/global-carbon-credit-market-growth-market-size-share-analysis/



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