Global Decarbonization Market - 2024-2031

Global Decarbonization Market reached US$ 1.84 trillion in 2023 and is expected to reach US$ 4.38 trillion by 2031, growing with a CAGR of 11.42% during the forecast period 2024-2031.

The global decarbonization market is rapidly expanding due to governments, corporations and organizations escalating their initiatives to address climate change and achieve sustainability objectives. Decarbonization refers to the process of decreasing or eliminating carbon dioxide (CO2) and other greenhouse gas emissions throughout the industrial, commercial and residential sectors. This is generally accomplished through the shift to cleaner energy sources, enhancements in energy efficiency and the use of carbon capture technologies.

The decarbonization market is fueled by strong governmental regulations and international agreements aimed at lowering global emissions. The Paris Agreement, endorsed by almost 200 nations, established lofty objectives to restrict global temperature increase to much below 2°C above pre-industrial levels, with an aspirational target of 1.5°C. Consequently, governments globally have established carbon neutrality or net-zero emission objectives. For instance, the European Union has committed to being the first climate-neutral continent by 2050 under its European Green Deal, which will have a considerable impact on the demand for decarbonization technologies.

Asia-Pacific is the fastest-growing market for decarbonization solutions, driven by the growing demand for energy, government policies that prioritize sustainability and the growing recognition of the necessity to address climate change. Some of the largest emergent economies in APAC, including China, India, Japan and Southeast Asia, are making substantial progress in the reduction of carbon emissions and the transition to a low-carbon economy.

By 2040, Asia, which encompasses China and India, will account for 43% of global energy demand, according to the World Economic Forum. Additionally, the region will contribute over 50% of the demand growth during that year, solidifying its position as a key actor in the global energy transition.

Dynamics

Technological Advancements in Decarbonization

Decarbonization initiatives are highly dependent on technological innovations in energy storage, renewable energy and carbon capture and storage (CCS). In order to become more cost-competitive with fossil fuels, solar, wind and hydroelectric power continue to expand their market share. From 2010 to 2020, the cost of electricity from solar photovoltaics has decreased by 89%, according to the International Renewable Energy Agency (IRENA), while offshore wind energy costs have decreased by 70%. The developments are aiding in the transition to healthier energy sources and decreasing the dependence on coal, oil and natural gas.

Direct air capture and point-source capture are being integrated into industrial processes and carbon capture technologies, particularly CCUS, have become a focal point for decarbonization. According to the International Energy Agency (IEA) Sustainable Development Scenario, in which net global CO2 emissions from the energy sector are eliminated by 2070, carbon capture and storage (CCS) is responsible for the mitigation of approximately 5.6 billion tonnes of carbon dioxide annually by 2050 (GtCO2/yr), which is approximately 140 times the current level of 40 million tonnes per year.

Heavy Investment in Green Technologies

Currently, the decarbonization marketplace is most significantly driven by investment in renewable energy technologies. This transition is a component of a broader transition and the International Energy Agency (IEA) has reported that the investment ratio of renewable energy to fossil fuels is now nearly two dollars per dollar of investment in fossil fuels. For instance, the Inflation Reduction Act (IRA) of 2022 constitutes a stark U.S. example. This legislation allocates $369 billion to sustainable energy initiatives, which encompass subsidies for renewable electricity and carbon capture technologies.

Government subsidies, tax credits and financial incentives encourage the early adoption of these technologies. As an example, the International Energy Agency predicts that the investment in solar photovoltaic technology alone will surpass US$ 500 billion in 2024, which is the highest amount of investment in any single energy technology globally for new power generation. Furthermore, a significant portion of the newly acquired power will be allocated to grid infrastructure as nations intensify their efforts to integrate renewable energy sources.

Regulatory Uncertainty and Financing Challenges

Despite the global commitment to decarbonization, policy inconsistency and regulatory uncertainty remain key challenges in accelerating the transition. While many countries have established long-term climate goals, the implementation of short-term policies, particularly in developing nations, remains uneven. The International Energy Agency (IEA) calls for clearer policy signals and greater international cooperation to avoid fragmentation and ensure a smooth transition to a low-carbon economy.

Furthermore, While investment in clean energy is growing, there are still significant gaps in financing, particularly in developing nations. The International Finance Corporation (IFC) estimates that US$ 23 trillion will be required for the global transition to net-zero emissions by 2030, but current funding levels fall short. Mobilizing private sector financing, particularly for small and medium-sized enterprises (SMEs) and emerging economies, will be crucial to meeting global decarbonization targets.

Segment Analysis

The global decarbonization market is segmented based on service, technology, deployment, end-user and region.

The Demand for Renewable Energy Transition

The renewable energy sector is at the forefront of the global decarbonization market, with projections indicating that it must account for at least 90% of global power generation by 2050 in order to meet the climate targets established by international agreements. The International Renewable Energy Agency (IRENA) underscores that solar, wind and hydropower will serve as the primary sources of energy during this transition. The energy landscape is anticipated to be dominated by these renewable sources, necessitating significant investments in battery storage capacity to solve the problems associated with intermittent power supply.

Enhancing energy storage infrastructure and expanding the implemented capacity of renewable technologies are essential components of a comprehensive strategy to accomplish these ambitious objectives. Renewable energy units will be substituted for existing fossil fuel power plants during the transition, which is crucial for the reduction of greenhouse gas emissions. However, this transition results in elevated electricity expenses and necessitates planning to guarantee equitable energy access, as lower-income populations may be disproportionately affected.

Geographical Penetration

High Technology Adoption Rates and Strong Consumer Awareness in North America

North America is currently at the forefront of the decarbonization initiative as a result of technological advancements, government incentives and regulatory frameworks. It is expected that US will remain the largest market for decarbonization technologies, such as renewable energy, electric vehicles and carbon capture methods. In comparison to emission levels in 2005, US government has committed to a 50% to 52% reduction in carbon emissions by 2030.

The reduction is accomplished through infrastructure projects and clean energy investments, which encompass the adoption of electric vehicles, the advancement of clean energy technology and the utilization and storage of carbon capture and utilization (CCUS). Similarly, the Decarbonization Incentive Program (DIP) of Canada is designed to support the reduction of greenhouse gas emissions and encourage the long-term decarbonization of the country's industrial sectors. The demand for decarbonization in the region was further bolstered by this initiative.

Competitive Landscape

The major global players in the market include Ernst & Young Global Limited, DNV, Armstrong International Inc., Boston Consulting Group, ABB, Deloitte, Arup, MAN, Siemens and Wartsila.

Sustainability Analysis

The decarbonization market is intrinsically linked to global sustainability objectives, focusing on reducing carbon footprints and combating climate change. As countries and organizations increasingly recognize the urgency of addressing climate issues, the demand for low-carbon technologies is surging. The transition from fossil fuels to renewable energy sources, such as solar and wind, is crucial in achieving international climate targets and fostering a sustainable future.

Moreover, many companies are committing to climate change mitigation by publicly disclosing their emissions and setting ambitious reduction targets. Initiatives like the science-based target initiatives and the UN's Global Compact are witnessing increased corporate participation, reflecting a growing recognition of sustainability's importance in business strategies. This evolution not only aids in reducing greenhouse gas emissions but also aligns with broader environmental goals, thereby paving the way for a resilient and sustainable economic future.

AI Impact

Artificial Intelligence (AI) is revolutionizing the decarbonization market by optimizing processes, enabling predictive analytics and driving innovative solutions that accelerate the transition to a low-carbon economy. AI algorithms predict energy demand patterns, helping grid operators balance supply and demand more effectively. For instance, Google DeepMind has partnered with utilities to forecast energy consumption, reducing reliance on carbon-intensive backup systems.

AI-driven systems are revolutionizing carbon emissions tracking and management, which is critical for regulatory compliance and achieving decarbonization targets. Similarly, AI supports decarbonization in transportation by optimizing logistics, improving fuel efficiency and advancing autonomous vehicle technologies. Furthermore, AI models simulate the impact of various decarbonization strategies, helping governments and organizations prioritize investments and policies.

By Service

• Carbon Accounting & Reporting Services
• Sustainable Transportation Services
• Waste Reduction & Circular Economy Services
• Others

By Technology

• Renewable Energy
• Energy Storage
• Carbon Capture, Utilization and Storage (CCUS)
• Hydrogen Technologies
• Electrification
• Others

By Deployment

• On-premises
• Cloud

By End-User

• Oil & Gas
• Energy & Utility
• Agriculture
• Government
• Automotive & Transportation
• Aerospace & Defense
• Manufacturing
• Others

By Region

• North America
  • US
  • Canada
  • Mexico
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Rest of Europe
• South America
  • Brazil
  • Argentina
  • Rest of South America
• Asia-Pacific
  • China
  • India
  • Japan
  • Australia
  • Rest of Asia-Pacific
• Middle East and Africa

Key Developments

• In November 2024, TotalEnergies partnered with Air Liquide to accelerate decarbonization at its La Mede biorefinery in France by producing renewable hydrogen, complementing its existing Masshylia green hydrogen project with ENGIE. With a total investment of EUR 150 million, these initiatives align with TotalEnergies' ambition to decarbonize its European refineries, targeting a reduction of three million tons of CO2 annually by 2030, contributing to the Provence-Alpes-Cote-D'azur region's transition toward low-carbon energy solutions.
• In November 2024, Eaton introduced the xStorage(TM) Battery Energy Storage System (BESS) to advance decarbonization initiatives and optimize the use of onsite renewable energy. This innovative system allows communities and businesses to strategically store and dispatch energy, reducing reliance on the grid, lowering energy costs, cutting carbon emissions and maintaining power during outages.
• In January 2023, Cepsa advanced its commitment to the decarbonization market by initiating the construction of three new solar power plants in Castilla-La Mancha, Spain. These facilities, located in the communities of Campo de Criptana and Arenales de San Gregorio, collectively boast a capacity of 400 MW. The EUR 280 million investment underscores Cepsa's strategic focus on expanding renewable energy infrastructure to reduce carbon emissions and contribute to Spain's clean energy transition goals.

Why Purchase the Report?

• To visualize the global decarbonization market segmentation based on technology, automation, application, end-user and region.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points at the decarbonization market level for all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as excel consisting of key products of all the major players.

The global decarbonization market report would provide approximately 70 tables, 70 figures and 204 pages.

Target Audience 2024

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies