Carbon Offset/Carbon Credit Market Size was valued at USD 410.5 Billion in 2022. The Carbon Offset/Carbon Credit market industry is projected to grow from USD 541.8 Billion in 2023 to USD 4994.3 Billion by 2032, exhibiting a compound yearly growth rate (CAGR) of 32.0% during the forecast period (2024 - 2032). Increased global awareness and commitment to combat climate change and regulatory and policy support are the key market drivers enhancing growth of the market.
Source: The Secondary Research, Primary Research, MRFR Database and Analyst Review
June 2024: WGL Holdings announced a partnership with a renewable energy project to enhance their carbon offset portfolio. The initiative aims to invest in wind and solar energy projects to offset the carbon footprint of their operations.
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 market offers investment opportunities in sustainable projects. This can attract financial institutions and investors seeking both financial returns and positive environmental impact. Thus driving the Carbon Offset/Carbon Credit market revenue.
The Carbon Offset/Carbon Credit Market segmentation, based on type, includes the Compliance Market and the Voluntary Market. The voluntary market segment dominates the market, accounting for the largest market revenue, and allows a wide range of organizations and individuals to participate voluntarily in carbon offsetting, making it highly inclusive. Moreover, many individuals and companies choose to voluntarily offset their emissions as the part of their sustainability and corporate social responsibility (CSR) initiatives. The voluntary market often encourages innovation in carbon offset projects. It fosters a variety of projects beyond regulatory compliance, and the market is not confined by regional or national regulations, allowing for global participation.
Figure 1: Carbon Offset/Carbon Credit Market, by Type, 2024 & 2032 (USD Billion)
Source: The Secondary Research, Primary Research, MRFR Database and Analyst Review
The Carbon Offset/Carbon Credit Market segmentation, based on project type, includes Avoidance/Reduction Projects and Removal/Sequestration Projects. The removal/sequestration projects category dominates the market as they are highly effective at capturing and storing carbon dioxide (CO2) from the atmosphere. Removal/Sequestration Projects offer a tangible way to remove more CO2 from atmosphere than they emit, making them attractive for offsetting emissions. Companies and investors are increasingly focusing on sustainability and environmental, social, and governance (ESG) factors. Investing in Removal/Sequestration Projects aligns with these goals, as it demonstrates a commitment to mitigating climate change and protecting biodiversity. Carbon credits generated from Removal/Sequestration Projects are versatile and can be utilized by a wide range of industries and organizations to offset emissions.
The Carbon Offset/Carbon Credit Market segmentation, based on end user, includes Power, Energy, Aviation, Transportation, Industrial, Buildings and Others. The industrial category dominates the market. They often invest in carbon offset projects to compensate for their emissions. These projects could include initiatives like methane capture from landfills, energy-efficient industrial processes, or reforestation efforts. The industrial sector's emissions can be substantial, making it a significant contributor to the demand for carbon offsets and credits. Further, the power segment is anticipated to be the second-largest, where electricity generation is a major source of emissions, and utilities purchase carbon credits to offset these emissions.
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, MRFR 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 2023 to 2032. 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, the Carbon Offset/Carbon Credit 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)
October 2023: ClimateSeed and Microsoft partnered to launch a new platform that will help businesses purchase carbon credits to offset their carbon emissions. The platform will provide businesses with access to a wide range of carbon offset projects, including renewable energy, forestry, and energy efficiency projects.
August 2022: Johnson Controls, a global leader in building technologies and solutions, has collaborated with 3Degrees to accelerate its race to net zero. The collaboration will fast-track Johnson Controls' net zero goals through carbon reduction services, including carbon offsetting.
May 2023: JPMorgan Chase acquired OpenInvest, a sustainable investing platform. OpenInvest provides individuals and businesses with access to a variety of sustainable investment options, including Carbon offset funds.
| Report Attribute/Metric | Details |
| Market Size 2022 | USD 410.5 Billion |
| Market Size 2023 | USD 541.8 Billion |
| Market Size 2032 | USD 4994.3 Billion |
| Compound Annual Growth Rate (CAGR) | 32.0% (2024-2032) |
| Base Year | 2023 |
| Market Forecast Period | 2024-2032 |
| Historical Data | 2018- 2022 |
| Market Forecast Units | Value (USD Billion) |
| Report Coverage | Revenue Forecast, The Market Competitive Landscape, Growth Factors, and Trends |
| Segments Covered | Type, Project Type, End User and Region |
| Geographies Covered | North America, Europe, Asia Pacific, and the Rest of the World |
| Countries Covered | The US, Canada, Germany, France, UK, Italy, Spain, Japan, China, India, Australia, South Korea, and Brazil |
| Key Companies Profiled | Â WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Clear Sky Climate Solutions, Sustainable Travel International, 3 Degrees, Terrapass, and Sterling Planet, Inc. |
| Key Market Opportunities | The increasing adoption of carbon offset programs. |
| Key Market Dynamics | Increased global awareness and commitment to combat climate change and regulatory and policy support. |
Frequently Asked Questions (FAQ) :
The Carbon Offset/Carbon Credit Market size was valued at USD 410.5 Billion in 2022.
The global market is foreseen to rise at a CAGR of 32.0% during the forecast period, 2024-2032.
North America had the largest revenue in the global market
The key participants in the market are WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Clear Sky Climate Solutions, Sustainable Travel International, 3 Degrees, Terrapass, and Sterling Planet, Inc.
The voluntary market category dominated the market in 2022.
The industrial had largest share in the global market.
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