Carbon Offset Carbon Credit Market

• Growing global awareness and commitment to combat climate change is driving the market growth

Market CAGR for carbon offset/carbon credit is being driven by the rising global awareness and commitment to combat climate change. As concerns about the environmental impacts of carbon emissions and the urgency of mitigating climate change grow, governments, businesses, and individuals are increasingly recognizing the importance of reducing their carbon footprints. This heightened awareness is driving demand for carbon offsets and carbon credits as a means to offset or compensate for emissions that are challenging to eliminate entirely.

Many countries and regions have made commitments under international agreements like the Paris Agreement to reduce their greenhouse gas emissions. These commitments often include ambitious targets to limit global temperature rise. To meet these targets, governments and organizations must take concrete actions to reduce emissions. While efforts are made to reduce emissions through energy efficiency, renewable energy adoption, and sustainable practices, it's often challenging to eliminate all emissions completely.

Some sectors, like aviation or certain industrial processes, may have emissions that are difficult to eliminate with current technology. Carbon offsets and carbon credits provide a mechanism to address emissions that are challenging to reduce directly. These instruments allow entities to invest in projects that either capture or reduce an equivalent amount of greenhouse gases elsewhere. This can include reforestation projects, renewable energy development, methane capture from landfills, and more.

The surging awareness of the need to address climate change has led to grown demand for carbon offsets and credits. Governments, corporations, and individuals are willing to purchase these instruments as a way to take responsibility for their emissions and contribute to global climate goals. Many businesses see carbon offsetting as part of their corporate social responsibility initiatives.

They may voluntarily purchase carbon credits to demonstrate their commitment to sustainability and climate action. Some governments have introduced regulations or incentives to encourage the use of carbon offsets and credits. This can include carbon pricing mechanisms, tax incentives, or emissions trading schemes that drive market growth. The Carbon Offset/Carbon Credit industry offers investment opportunities in sustainable projects. This can attract financial institutions and investors seeking both financial returns and positive environmental impact. Thus driving the market revenue.

By region, the study givees market insights into the North America, Europe, Asia-Pacific and the Rest of the World. The North American Carbon Offset/Carbon Credit market area dominates this market, owing to a combination of supportive regulatory frameworks, corporate commitment to sustainability, a wide range of offset project options, and a growing awareness of climate change and environmental responsibility. These factors have collectively contributed to the region's leadership in the market.

Further, the main countries studied in the market report are The US, Canada, Germany, France, the UK, Italy, Spain, Japan, China, India, Australia, South Korea, and Brazil.

Figure 2: Carbon Offset/Carbon Credit Market Share By Region 2022 (USD Billion)

Source: The Secondary Research, Primary Research, Market Research Future Database and Analyst Review

Europe's Carbon Offset/Carbon Credit market accounts for the second-largest market share due to the European Union Emissions Trading System (EU ETS), which is one of the world's largest and most comprehensive cap-and-trade programs, mandating emissions reductions and creating a robust demand for carbon credits within the region. Further, the German Carbon Offset/Carbon Credit market held the largest market revenue, and the UK Carbon Offset/Carbon Credit market was the fastest-growing market in the European region.

The Asia-Pacific Carbon Offset/Carbon Credit Market is expected to grow at the rapid CAGR from 2025 to 2034. This is due to the rapid economic growth, increasing industrialization, and the urbanization in the region, and governments seek ways to mitigate the associated rise in greenhouse gas emissions and comply with international climate goals. Moreover, China’s Carbon Offset/Carbon Credit market held the largest market share, and the Indian Carbon Offset/Carbon Credit market was the fastest-growing market in the Asia-Pacific region.

Leading market players are investing heavily in the research and development in order to expand their product lines, which will help the Carbon Offset/Carbon Credit market grow even more. Market players are also undertaking a variety of strategic activities to spread their global footprint, with important market developments including contractual agreements, new product launches, mergers and acquisitions, higher investments, and collaboration with other organizations. To spread and survive in a more competitive and rising market climate, the Carbon Offset/Carbon Credit industry must offer cost-effective items.

Manufacturing locally to minimize the operational costs is one of the key business tactics used by teh manufacturers in the global Carbon Offset/Carbon Credit industry to benefit the clients and increase the market sector. In recent years, this industry has offered some of the most significant advantages to the environment.

Major participants in the Carbon Offset/Carbon Credit market, including WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Clear Sky Climate Solutions, Sustainable Travel International, 3 Degrees, Terrapass, Sterling Planet, Inc., and others, are attempting to increase market demand by investing in the research and development operations.

AXA Investment Managers (AXA IM) is a global asset management firm and a subsidiary of the AXA Group, one of the world's largest insurance and financial services companies. The company provides a wide range of asset management services, including investment solutions across various asset classes such as equities, fixed income, multi-asset, real assets, and alternative investments. AXA IM caters to a diverse set of clients, including pension funds, insurance companies, sovereign wealth funds, and individual investors.

In September 2023, AXA IM, the asset management arm of AXA Group, acquired ClimateSeed, a carbon offsetting platform that connects businesses with carbon reduction projects. ClimateSeed has a portfolio of 36 projects in 24 countries, with a total capacity of over 4 million verified carbon credits. The acquisition will allow AXA IM to offer its clients a more comprehensive range of sustainability solutions.

3Degrees is a company that specializes in environmental sustainability and renewable energy solutions. 3Degrees is a renewable energy and sustainability services company headquartered in San Francisco, California. The company was founded in 2007 with a mission to help organizations and individuals take action on climate change and minimize their environmental impact. In November 2023, 3Degrees, a sustainability consulting firm, partnered with Merge Electric Fleet Solutions, a provider of electric vehicle (EV) charging infrastructure.

The partnership will provide Merge's fleet customers with access to actionable analysis and decades of expertise in carbon reduction and renewable energy. 3Degrees will also monetize Merge's charging in the clean fuels states of California, Oregon, and Washington and offset all EV charging with renewable energy credits (RECs)