Carbon Credits Market Size, Share, By Type (Compliance Market, Voluntary Market), By Project Type (Renewable Energy, Energy Efficiency, Forestry, Others), By End-Use (Power, Energy, Transportation, Others), and By Region - Trends, Analysis and Forecast till 2034

Carbon Credits Market Size was valued at USD 550.1 Billion in 2024 and is expected to reach USD 2436.2 Billion by 2034 growing at a CAGR of 17.8%

Carbon credits are permits that allow the owner to emit a certain amount of carbon dioxide or other greenhouse gases (GHGs). One credit permits one ton of carbon dioxide or other greenhouse gas emissions. Other associated terminologies are carbon offsetting or carbon credits. Carbon credits represent half of the cap-and-trade program. Companies that are big emitters are lavished with credits to be in a position to continue polluting up to a particular degree, which periodically declines. The company is at liberty to sell any unneeded credits to other firms in need of them; hence, private companies are doubly incentivized to reduce greenhouse emissions.

A carbon credit is a tradable certificate or permit representing the right to emit one ton of carbon dioxide or its equivalent in greenhouse gases. These credits are part of international efforts to mitigate climate change by capping the total amount of G.H.G. emissions and leaving it for the market mechanisms to drive Transportation and Energy processes toward lower-emitting routes. Credits are allocated to companies or countries in a certain number, which they have to possess to cover their emissions. They can sell these excess credits to others in need when they emit less than their assigned allocation. This brings about a financial incentive for an entity to reduce its carbon emissions, as it will create an avenue of profit if the excess credits go unsold.  It is created through various projects that reduce, avoid, or remove greenhouse gases from the atmosphere, such as reforestation projects, renewable energy installations, and energy efficiency enhancements. From there, carbon credits become a core of both cap-and-trade programs and voluntary carbon markets on global warming.

Carbon credits have numerous uses and advantages in mitigating climate change. Perhaps the most important use is within the cap-and-trade systems, providing an absolute limit on emissions by placing a cap and being able to trade credits among different entities to achieve cost-effective reductions. It encourages companies to innovate and lower their emissions so that they can sell their excess credits at a higher price. Another application is in the voluntary carbon markets, whereby companies purchase credits to use for offsetting their carbon footprint, showing concern for corporate social responsibility to appeal to environmentally conscious consumers. Benefits include the following: provision of a market drive toward the reduction of emissions; the assurance of finance for green technologies, as well as financing for sustainable development projects in all parts of the world. These run from their use in environmental sustainability to their role in driving green jobs and economic growth, and even the ability of developing countries to join the process of mitigating climate change by earning carbon credits through projects generating these credits. In other words, carbon credits are versatile instruments for attaining a delicate balance between economic and environmental goals while mitigating greenhouse gas emissions worldwide.

Disclaimer: This data is only a representation. Actual data may vary and will be available in the report.

Key Drivers of Target Market:

Stringent Regulations:

• Governments all over the world are imposing more stringent regulations to reduce greenhouse gas emissions. Compliance markets are an outcome of such regulations, wherein companies that emit more than their limits have to compulsorily buy carbon credits from those that have kept their emissions below their limits. In years to come, this policy approach is going to become more widespread and drive great demand for carbon credits.

Increased Project Development:

• The incentive to develop projects that generate credits increased with rising demand for carbon credits. Such projects include forestry—for instance, reforestation initiatives and sustainable management of forests—energy efficiency projects. Not only do these projects generate carbon credits, but they also help deliver broader environmental benefits like cleaner air quality, biodiversity conservation, and reduced pollution.

Restrains:

Lack of Standardization:

• At this point, a uniform and globally accepted standard for credit verification and quantification remains absent. There is, therefore, an incoherence between credits from different projects and parts of the world, generally raising comparability problems regarding credits of different origins. This could confuse the buyers, undermine price discovery within the market, and discourage investment because it is keenly aware of the uncertainties of credit quality. There are efforts in the pipeline for more harmonized standards, but there are always problems encountered when it is applied worldwide.

Opportunities:

Accelerated Emission Reductions:

• The trading market can be called a value addition in terms of finance to companies and organizations through projects with reduced GHG emissions emanating from them. This will accelerate the achievement of mitigation goals on climate change. A carbon price fed by the market urges imposition to adopt cleaner technologies, increase energy efficiency measures, and reduce environmental footprints. This can be translated to millions of tons of reductions in CO2 a year at the global level—mitigating the worst effects of climate change, such as sea-level rise and extreme weather events, and disrupting ecosystems.

The market is segmented based on Type, Project Type, End-User, and Region.

Type Insights:

• Compliance Market: The compliance market is created by the mandatory or so-called regulated national, regional, or international carbon reduction regimes. Through these, governments set ceilings on the quantum of GHG gases that can be emitted, and companies are mandated to keep their emissions within these limits. Should they fail to do so, they can buy carbon credits from others who have a surplus supply of GHG gases. These policies are the European Union Emissions Trading System, which includes the enforcement of organizations to be within legal emission thresholds, and California's Cap-and-Trade Program.
• Voluntary Market: In the voluntary market, companies and individuals buy carbon credits on a voluntary, oftentimes CSR-driven or value-based, step toward environmental stewardship. This is where voluntary market buyers go to offset their carbon footprint through investments in various projects aimed at reducing greenhouse gases, such as reforestation or renewables. The difference from the compliance market is that this participation is not mandated but is done with the idea of being an environmentally friendly actor for the sake of reputation.

Project Type Insights:

• Renewable Energy: These are projects targeted at the generation of energy using such renewable resources as wind, solar, hydro, and geothermal. Such projects reduce dependency on fossil fuels and hence reduce greenhouse gases. Projects on renewable energy are very important in the process of transferring to force a more sustainable energy system at the present moment, overpowering in the deal for obtaining carbon credits; they reduce emissions majorly through the substitution of traditional sources of energy.
• Energy Efficiency: Projects on energy efficiency would reduce the consumption of energy or improve efficiency in utilizing energy; this could be upgrading industrial processes, enhancing insulation in buildings, and bringing in energy efficiency in the use of technologies. This is also supposed to reduce emissions in carbon, because such projects employ much less energy and yet do the very same thing, hence earning carbon credits for the participant in the trade market.
• Forestry: Projects included in forestry are reforestation, afforestation, and conservation. They sequester from the atmosphere Carbon dioxide in the growth of trees, acting as carbon sinks. Protection and afforestation of the same are paramount in ensuring the available biodiversity is maintained, air quality improvement, and combating climate change. Generated carbon credits from forestry projects majorly attract businesses that seek to balance their emitting by naturally reducing their carbon footprint.
• Others: This category incorporates numerous other project types that offer reductions in the levels of carbon, including waste management, methane capture, and water conservation. Projects can comprise capturing emissions of methane from landfills, enhancing agricultural practices, and promoting sustainable land use. All of these activities are very important in reducing the aggregate amount of GHG that is emitted and provide various ways of producing carbon credits.

End-User Insights:

• Power: The power sector accounts for a huge share of carbon credits, specifically those created by renewable energy projects. In the power sector, companies buy carbon credits to offset their emissions from generating electricity, which happens largely through production using fossil fuels. Low-carbon power generation is of paramount importance if global reduction targets on emissions are to be kept at bay; the carbon credit is one such measure that can enable that change.
• Energy: These carbon credits are also purchased by firms from the oil and gas sector, similar to those in the power sector. The corporations in this sector finance carbon offsetting projects to curb the emissions of the extracted, refined, and distributed products. Energy efficiency projects and renewable energy investments are common means of generating carbon credits and expressing a commitment toward sustainability.
• Transportation: Carbon credits are used to offset emissions from vehicles, aviation, and shipping by the transport sector, responsible for a major share of emissions made by mankind into the atmosphere. The investments in this sector with cleaner technologies, that is, electric vehicles, biofuels, and improved logistics, restrain the activities harnessed through transportation from the creation of a bigger carbon footprint. These are often balanced through carbon credits emanating from projects on reforestation and renewable energy.
• Others: Other sectors that engage in carbon credits include manufacturing, agriculture, and construction. All these three sectors invest in carbon offset projects to curb their impact on the environment or climate change. For manufacturing companies, an example would be the switch to energy-efficient technologies, while for agricultural companies, sustainable ways would benefit and reduce emissions. Carbon credits have enabled the participation of these diversified sectors in emission reduction globally and a step forward in their sustainability profiles.

Regional Insights

• North America: Carbon markets in North America, especially the United States and Canada, are very active and primarily driven by regional initiatives, such as California's Cap-and-Trade Program and carbon pricing policies in all provinces in Canada. Hundreds of renewable energy and forestry projects in the region generate carbon credits. Both compliance and voluntary markets in which parties take part reflect not only corporate social responsibility but also regulatory needs.
• Asia Pacific: The Asia Pacific countries, in a way like China, India, and Australia, are coming up with an emerging carbon credits market due to enhanced awareness regarding the environment and considerable policies from the government. This also includes the initiation of a national carbon market by none other than China, to reduce its emissions. There is no lack of potential in the region concerning renewable energy, with numerous solar, wind, and hydro projects producing carbon credits. The importance of forestry and land-use projects also seems to be quite important.
• Europe: Europe serves as the epicenter of the carbon credits market. The EU ETS was one of the first compliance markets to be formed, with one of the largest in the world. In general, there is a strong base and renewable energy and energy efficiency project orientation in Europe. European-based companies are more likely to be involved in the compliance market and can often be found selling into both this and the voluntary markets in an attempt to increase green credentials and meet very stringent emission reduction targets.
• Latin America: Latin America is considered to have vast potential for carbon credit projects in forestry and renewable energy. The countries mostly recognized for their large-scale forest resources are Brazil and Colombia, used for projects related to carbon sequestration. Renewable energy projects, particularly in wind and hydro, have also been very common. The flow of international investments and local sustainability initiatives helps to fuel the regional carbon credits market.
• Middle East and Africa: Simplistically, the Middle East & Africa have aggressively started taking part in this market due to the availability of natural resources in the region, with a focus on renewable projects—particularly solar and wind—for carbon credit accrual. Countries like South Africa and the UAE are developing a carbon market to address climate change and help diversify their economies. Africa generates carbon credits from forestry and land restoration activities to support global emission reduction efforts.

Carbon Credits Market Report Scope:

Segments Covered in the Report:

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2024 to 2034. For the purpose of this study segmented the target market report based on Type, Project Type, End-User, and Region.

By Type:

• Compliance Market
• Voluntary Market

By Project Type:

• Renewable Energy
• Energy Efficiency
• Forestry
• Others

By End-User:

• Power
• Energy
• Transportation
• Others

By Region:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Russia
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • Israel
  • South Africa
  • Rest of Middle East & Africa

The key players operating the Carbon Credits Market include The Carbon Trust, Climate Impact Partners, South Pole, 3Degrees, VERRA, TerraPass, CarbonClear, PwC, EcoAct, ClimeCo, Ecosecurities, ALLCOT, Atmosfair, The Carbon Collective Company, Sterling Planet Inc, WGL Holdings, Inc., Green Mountain Energy Company.

Disclaimer: This data is only a representation. Actual data may vary and will be available in the report.

• In March 2024, CFC enters the carbon insurance market with a new product. CFC, a specialist insurance provider, has announced its debut in the carbon insurance market by launching a "groundbreaking" new product. According to reports, Carbon Delivery Insurance is the first to cover both the physical and political risks that businesses encounter when purchasing voluntary carbon credits in advance. Carbon Delivery Insurance, according to CFC, protects the entire purchaser's investment if carbon credits are not delivered. CFC has developed a sophisticated underwriting model that rates carbon projects rather than policyholders. This makes the goods easier to purchase and eliminates the need for lengthy, complex application forms and protracted talks that take weeks to produce a quotation.
• In January 2024, Loam Bio, a carbon technologies leader, announced new opportunities for the United States. Novel biology creates steady carbon levels in soil and enhances carbon credit. R.O.I. Loam Bio, an Australian leader in carbon market technologies, has announced its entry and product offering in the United States. CarbonBuilder, the company's pioneering microbial technology, increases stable carbon in the soil, allowing farmers to access carbon markets via the company's carbon program, SecondCrop, without the initial risk of major practice change. Loam Bio has developed a solution that combines our revolutionary microbial technology for building soil carbon at scale with the capacity to earn a better return on premium carbon credits," says Kevin Hodges, Senior Vice President of Commercial Operations at Loam Bio.

• The Carbon Trust*
  • Company Overview
  • Product Portfolio
  • Key Highlights
  • Financial Performance
  • Business Strategies
• Climate Impact Partners
• South Pole
• 3Degrees
• VERRA
• TerraPass
• CarbonClear
• PwC
• EcoAct
• ClimeCo
• Ecosecurities
• ALLCOT
• Atmosfair
• The Carbon Collective Company
• Sterling Planet Inc
• WGL Holdings, Inc.
• Green Mountain Energy Company

“*” marked represents similar segmentation in other categories in the respective section.

Research Objective and Assumption

• Research Objectives
• Assumptions
• Abbreviations

Market Preview

• Report Description
  • Market Definition and Scope
• Executive Summary
  • Market Snippet, By Technology
  • Market Snippet, By Project Type
  • Market Snippet, By End-User
  • Market Snippet, By Region
• Opportunity Map Analysis

Market Dynamics, Regulations, and Trends Analysis

• Market Dynamics
  • Drivers
  • Restraints
  • Market Opportunities
• Market Trends
• Product Launch
• Merger and Acquisitions
• Impact Analysis
• PEST Analysis
• Porter’s Analysis

Market Segmentation, By Type, Forecast Period up to 10 Years, (USD Bn)

• Overview
  • Market Value and Forecast (USD Bn), and Share Analysis (%), Forecast Period up to 10 Years
  • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
  • Segment Trends
• Compliance Market
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
• Voluntary Market
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years

Market Segmentation, By Project Type, Forecast Period up to 10 Years, (USD Bn)

• Overview
  • Market Value and Forecast (USD Bn), and Share Analysis (%), Forecast Period up to 10 Years
  • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
  • Segment Trends
• Renewable Energy
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
• Energy Efficiency
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
• Forestry
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
• Others
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
  • Segment Trends

Market Segmentation, By End-User, Forecast Period up to 10 Years, (USD Bn)

• Overview
  • Market Value and Forecast (USD Bn), and Share Analysis (%), Forecast Period up to 10 Years
  • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
  • Segment Trends
• Power
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
• Energy
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
• Transportation
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years

• Others
  • Overview
  • Market Size and Forecast (USD Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years

Market Segmentation, By Region, Forecast Period up to 10 Years, (USD Bn)

• Overview
  • Market Value and Forecast (USD Bn), and Share Analysis (%), Forecast Period up to 10 Years
  • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
  • Regional Trends
• North America
  • Market Size and Forecast (USD Bn), By Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Project Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By End-User, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Country, Forecast Period up to 10 Years
    • U.S
    • Canada
• Asia Pacific
  • Market Size and Forecast (USD Bn), By Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Project Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By End-User, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Country, Forecast Period up to 10 Years
    • India
    • Japan
    • South Korea
    • China
    • Rest of Asia Pacific
• Europe
  • Market Size and Forecast (USD Bn), By Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Project Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By End-User, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Country, Forecast Period up to 10 Years
    • UK
    • Germany
    • France
    • Russia
    • Italy
    • Rest of Europe
• Latin America
  • Market Size and Forecast (USD Bn), By Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Project Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By End-User, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Country, Forecast Period up to 10 Years
    • Brazil
    • Mexico
    • Rest of Latin America
• Middle East and Africa
  • Market Size and Forecast (USD Bn), By Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Project Type, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By End-User, Forecast Period up to 10 Years
  • Market Size and Forecast (USD Bn), By Country, Forecast Period up to 10 Years
    • GCC
    • Israel
    • South Africa
    • Rest of Middle East and Africa

Competitive Landscape

• Heat Map Analysis
• Company Profiles

• The Carbon Trust
• Climate Impact Partners
• South Pole
• 3Degrees
• VERRA
• TerraPass
• CarbonClear
• PwC
• EcoAct
• ClimeCo
• Ecosecurities
• ALLCOT
• Atmosfair
• The Carbon Collective Company
• Sterling Planet Inc.
• WGL Holdings, Inc.
• Green Mountain Energy Company

The Last Word

• Future Impact
• About Us
• Contact