Carbon Credits Market Size, Share, Growth Analysis, By Type (Regulatory, Voluntary), By Project Type (Avoidance/Reduction Projects, Removal/Sequestration Projects), By End-use (Aviation, Energy, Industrial), By Region - Industry Forecast 2024-2031

Global Carbon Credits Market size was valued at USD 2.2 billion in 2022 and is poised to grow from USD 479.41 billion in 2023 to USD 69.88 billion by 2031, growing at a CAGR of 39.4%during the forecast period (2024-2031).

Carbon credits are essential instruments in the fight against climate change, each representing the removal of one metric ton of carbon dioxide from the atmosphere. These permits are primarily purchased by individuals and businesses looking to compensate for their carbon emissions resulting from industrial operations. The management of carbon credits is overseen by various registries, including the American Carbon Registry (ACR), Climate Action Reserve (CAR), and the UN Clean Development Mechanism (UN CDM), which ensure the integrity of the credits. The sales of these credits generate significant revenue that provides vital funding for emission reduction projects, thereby incentivizing further initiatives focused on decreasing greenhouse gas emissions. This funding not only supports existing projects but also catalyzes new efforts, contributing to broader global strategies aimed at mitigating climate change and promoting a transition to a low-carbon economy. As businesses and individuals increasingly recognize their environmental responsibilities, the carbon credit market is expected to expand, creating more opportunities for emission-reducing projects and driving innovation in sustainable practices. The ongoing development of this market highlights the essential role of carbon credits in creating a sustainable future and fulfilling international climate commitments, emphasizing the urgent need for effective programs that ensure robust participation and transparency in the carbon offsetting process.

Top-down and bottom-up approaches were used to estimate and validate the size of the Global Carbon Credits market and to estimate the size of various other dependent submarkets. The research methodology used to estimate the market size includes the following details: The key players in the market were identified through secondary research, and their market shares in the respective regions were determined through primary and secondary research. This entire procedure includes the study of the annual and financial reports of the top market players and extensive interviews for key insights from industry leaders such as CEOs, VPs, directors, and marketing executives. All percentage shares split, and breakdowns were determined using secondary sources and verified through Primary sources. All possible parameters that affect the markets covered in this research study have been accounted for, viewed in extensive detail, verified through primary research, and analyzed to get the final quantitative and qualitative data.

Global Carbon Credits Market Segmental Analysis

Global Carbon Credits Market segmented by Type, Project Type, End user and region. Based on Type, the market is segmented into Regulatory and Voluntary. Based on Project Type, the market is segmented into Avoidance/Reduction Projects, Removal/Sequestration Projects (Nature-based, Technology-based. Based on end user, the market is segmented into Power, Energy, Aviation, Transportation, Industrial, Petrochemical, Buildings, and Others. Based on Region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & and Africa.

Driver of the Global Carbon Credits Market

The Global Carbon Credits market is poised for substantial growth, driven by an increasing demand for carbon credits to address climate change. According to McKinsey's analysis, demand is expected to peak around 2030, potentially matching the estimated annual supply of 8 to 12 GtCO2. This equilibrium relies on four key strategies: mitigating nature loss through measures like forest preservation, implementing nature-based sequestration such as reforestation, reducing emissions from sources like landfills, and advancing technological solutions for direct carbon dioxide capture from the atmosphere. These initiatives collectively underscore the importance of carbon credits in global sustainability efforts.

Restraints in the Global Carbon Credits Market

The Global Carbon Credits market faces significant restraints, primarily due to the urgent need for accelerated project development. This rapid pace is crucial for fully realizing and commercializing the anticipated supply of carbon credits, yet it presents a considerable challenge. Most of the expected supply is concentrated in a few countries, which could create logistical and geopolitical complications. Moreover, each carbon credit project comes with its own set of risks, and many find it difficult to secure funding due to the lengthy duration between the initial investment and the eventual sale of credits. This timeline can severely impact the overall viability of these projects.

Market Trends of the Global Carbon Credits Market

The Global Carbon Credits market is experiencing a significant upward trend, driven by heightened commitment from companies to achieve net-zero emissions. According to projections from the Boston Consulting Group, the market could expand between $10 billion to $40 billion by 2030. This optimistic outlook is bolstered by insights from business executives, indicating a robust surge in demand for carbon offsets. As regulatory frameworks tighten and consumer preferences shift towards sustainability, businesses are increasingly turning to carbon credits as vital tools for compliance and ecological responsibility. This trend signifies a critical transition towards a more sustainable, carbon-conscious economy.