by The climate and carbon finance market involves financing solutions that help reduce greenhouse gas emissions and mitigate climate change risks. Carbon credits are generated by projects that reduce emissions or remove carbon from the atmosphere, and are traded in both compliance and voluntary carbon markets. Examples of such projects include renewable energy development, energy efficiency upgrades,forestation, and methane capture from landfill sites or livestock farms. Organizations and individuals invest in these projects to offset their own emissions or to claim carbon removal credits. The global climate and carbon finance market provides financing options to scale up climate action and low-carbon investments across sectors. It enables governments, businesses and private entities to meet emissions reduction targets in a cost-effective manner.
The global climate and carbon finance market is estimated to be valued at US$ 367 Bn in 2023 and is expected to exhibit a CAGR of 33.7% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
One of the key trends in the climate and carbon finance market is the rise of compliance carbon markets through international collaborations. Countries and regions are introducing carbon pricing mechanisms and emissions trading schemes to mandate carbon reductions from high-emitting industries. This is driving the demand for carbon credits and investments in low-carbon projects worldwide. For instance, the launch of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) by the International Civil Aviation Organization is expected to create a large demand for offsets in the coming decade. Similarly, the expansion of the European Union Emissions Trading System (EU ETS) aims to tighten emissions caps and boost the price of carbon. Such policy-driven compliance needs are accelerating investments and innovation in climate finance products and solutions.
Porter’s Analysis
Threat of new entrants: Climate and carbon finance is a niche market that requires specialized expertise, making it difficult for new players to enter. However, support from governments and investors is increasing.
Bargaining power of buyers: Large corporates and project developers have significant bargaining power as buyers as they can choose between different carbon credit providers and financing options.
Bargaining power of suppliers: Suppliers of carbon credits and projects have limited bargaining power due to the presence of many buyers and brokers in the market.
Threat of new substitutes: No direct substitutes exist for carbon credits and climate finance. Alternative methods for reducing emissions could emerge over time.
Competitive rivalry: The market is competitive with the presence of many international brokers, consultants and exchanges. Pricing pressure exists due to the availability of multiple options.
Key Takeaways
The Global Climate And Carbon Finance Market Size is expected to witness high growth over the forecast period driven by stringent regulations and increasing climate action commitments from governments and corporates. The global climate and carbon finance market is estimated to be valued at US$ 367 Bn in 2023 and is expected to exhibit a CAGR of 33.7% over the forecast period 2023 to 2030.
Regional analysis: The North America region currently dominates the market due to supportive government policies and presence of leading players in the US and Canada. However, the Asia Pacific region is expected to grow at the fastest pace during the forecast period backed by the large untapped potential in emerging economies like China and India.
Key players: Key players operating in the climate and carbon finance market are Climate Finance Partners (United States), Carbon Credit Capital (United States), ClimateCare (United Kingdom), South Pole Group (Switzerland), Climate Trust Capital (United States), Carbon Clear (United Kingdom), EcoAct (France), First Climate (Germany), ClimatePartner (Germany), Ecosphere+ (United Kingdom), Verra (United States), Gold Standard (Switzerland), Natural Capital Partners (United Kingdom), Climate Friendly (Australia), Forest Carbon (United Kingdom).
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
