The Carbon Offset Market is estimated to be valued at US$ 414.80 Billion in 2023 and is expected to exhibit a CAGR Of 31.7% over the forecast period 2023 To 2030, as highlighted in a new report published by Coherent Market Insights.
The carbon offset market involves greenhouse gas mitigation projects aimed at reducing the atmospheric levels of carbon dioxide and other greenhouse gases. Some common carbon offset projects include renewable energy, energy efficiency, forestry and land use, and transportation. Carbon offsets are usually traded as carbon credits, where one credit represents the reduction of one ton of carbon dioxide or equivalent greenhouse gases. Companies and individuals can buy these credits to offset their own emissions or to claim carbon neutrality.
Growing awareness about climate change and the need for urgent action is one of the key factors driving the growth of the carbon offset market. According to the IPCC, global CO2 emissions need to drop 45% by 2030 from 2010 levels to achieve climate targets. This has prompted many governments to introduce climate regulation and commitments. For example, the European Union introduced its emissions trading scheme in 2005 while Canada unveiled a federal carbon tax in 2019.Growing adoption of net-zero emission targets by companies is also boosting the demand for carbon offsets. As of 2022, over 3,000 companies globally have set or are in the process of setting Science Based Targets to halve emissions before 2030 and achieve net zero before 2050. Carbon offsets allow these companies to meet their climate goals in a cost-effective manner. Verified offsets from credible projects ensure emissions reductions are real, additional and permanent. The growing supply of such high-quality offsets is further accelerating market growth.
The global carbon offset market is segmented by source into forestry, renewable energy, landfill methane projects and others. The forestry segment currently dominates the market due to the wide range of forestation and urban tree plantation projects undertaken globally. Tree plantation is a cost effective and versatile option to offset carbon emissions through natural processes of photosynthesis and carbon sequestration.
Political: Regulations around carbon footprint reduction and emissions trading schemes enforced by governments across the world are driving the carbon offset market. Economic: Voluntary carbon markets are observing high growth as companies aim to neutralize carbon footprints and achieve sustainability goals. Social: Rising environmental awareness among individuals and organizations is stimulating the adoption of carbon offsetting activities. Technological: New technologies for monitoring and verification of carbon credit projects ensure transparency and boost stakeholder confidence in the offsets.
The global Carbon Offset Market is expected to witness high growth, exhibiting CAGR of 31.7% over the forecast period, due to increasing environmental regulations around the world for reducing carbon footprint. The United States currently dominates the carbon offset market with a share of over 30% in 2023, due to stringent policies enforced by EPA.
The Asia Pacific region is projected to witness fastest growth in the carbon offset market during the forecast period. This can be attributed to rapid industrialization and rising focus of countries like China, India and Japan on reducing their carbon emissions. China has emerged as a lucrative market for afforestation projects and renewable energy credits.
Key players operating in the carbon offset market are 3Degrees Inc., NativeEnergy, ClimatePartner, Carbon Credit Capital, Terrapass, Renewable Choice Energy, Gold Standard, Offsetters, South Pole Group, Veridium, Cool Effect, ClimateCare, MyClimate, Forest Carbon, Verified Carbon Standard. 3Degrees Inc., South Pole and ClimatePartner captured a collective market share of over 30% in 2023 through large-scale project portfolios and global client networks.
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it