Carbon Offset Market 2024 – Market Size & Segments Analysis, Industry Trends, Manufacturers Analysis, Opportunities and Forecast 2030

The global market value of the carbon offset market was valued at USD 333.8 billion in 2022, and CAGR of 9.8% is expected during the forecast period. Carbon offset market is a trading system, where carbon credits are bought, and sold. Reforestation is an important type of carbon offset project. Increasing demand for renewable energy is also required to make carbon offsets.

Rising environmental concerns, and government support are expected to offer lucrative opportunities for key players in the next five years. Transparency and traceability issues are expected to hamper the market growth. Increasing corporate sustainability goals, regulatory pressure on emission reduction, increasing awareness of climate change, and a growing focus on environmental responsibility among businesses and consumers is driving the growth in the market significantly.

Impact of Covid-19

Covid-19 had a significant impact on the market. Due to supply chain disruptions, uncertainties in economy, and stringent lockdown and physical distancing, the market had to face a slowdown. Covid-19 prompted some companies to enhance their environmental impact. Post covid-19, the market again started to regain its original position, where the key players in several regions provided to the people lucrative opportunities to be cautious about environment concern, and increasing focus on environment responsibility among the businesses, and consumers is driving the growth in the market.

Growth Drivers

Various business organizations are partially using carbon credits, which in long run is beneficial for them, and driving the growth in the market significantly. They are involved in such types of business, and activities which are helping them significantly, rising awareness of climate change, and the desire for companies to align with eco-friendly practices is driving the growth in the market. Surges in renewable energy projects, and the adoption of carbon offsetting as a strategy for achieving net-zero emissions contribute to the market's emissions.

Regulatory framework promoting carbon neutrality The surge in renewable energy projects is propelling the growth in the market. Con la inclusión de actividades como reforestation, and methane capture initiatives, this market is gaining traction in the world. By encouraging emission reduction projects, this market is playing a crucial role in addressing climate change.

Segmentation

By Type

·         Compliance Market

·         Voluntary Market

By Project Type

·         Avoidance/Reduction Projects

·         Removal Projects

By End-User

·         Power

·         Energy

·         Aviation

·         Transportation

·         Industrial

·         Building

·         Others

Regional Outlook

·         Asia Pacific

·         North America

·         Europe

·         Latin America

·         Middle East and Africa

Carbon Offset Market End-User Segmentation

On the basis of the End-User, the Carbon Offset market is segmented into Power, Energy, Aviation, Transportation, Industrial, Buildings, and Others. The Power segment is expected to lead the market during the forecast period. Power generation has been one of the most carbon intensive sectors. As a result, power companies face significant pressure to reduce emissions, and often turn to carbon offsetting to complement their efforts in transitioning to cleaner energy sources.

The heavy investment by many power companies in renewable energy projects, such as wind, solar, and hydroelectric power, is boosting the demand in the carbon offset market. Stringent regulation and emission reduction targets for the power sector drive the demand for carbon offset. Power companies, especially those supplying electricity to corporate clients, face demand from customers for sustainable, and carbon neutral energy sources. Advancements in carbon capture, and storage technologies within the power sector enable companies to implement projects that directly reduce emissions. The energy, aviation, and transportation sectors play significant roles in the carbon offset market for distinct reasons.

The energy sector contributes to the carbon offset market through investment in renewable energy projects, such as wind, solar, and hydroelectric power, which generate carbon credits. Aviation is a carbon intensive industry due to aircraft emissions. The sector invests in carbon investment projects, such as reforestation, and sustainable aviation fuel initiatives, to mitigate its environmental impact. The transportation sector contributes to the carbon offset market by adopting electric vehicles and sustainable transport solutions and reducing reliance on fossil fuels.

Regional Outlook

On the basis of the regions, the carbon offset market is segmented into 5 parts: Asia Pacific, North America, Latin America, Europe, and Middle East and Africa. Asia Pacific is the leading segment, and is expected to dominate the market during the forecast period. China is the biggest market in the region due to rapid industrialization and economic growth, resulting in substantial carbon emissions. As a response, there is a growing need for carbon offsetting to mitigate the environmental impact. Increasing investment by China in renewable energy projects is driving growth in the market significantly.

China has implemented policies and regulations to address environmental concerns and combat climate change. As a manufacturing hub, Chinese companies are often occupied in global supply chains. This has led to increased awareness and demand for carbon offset practices to align with international sustainability standards. Europe is a major driver, establishing a cap-and-trade system for carbon allowances.

Companies exceeding their emission limits, doing buy credits, and fostering a market for carbon offset transactions Stringent environmental regulations, and policies at both national and EU levels incentivize organizations in carbon offsetting to foster market growth. Beyond regulatory requirements, there is a growing voluntary carbon market in Europe. Increasing numbers of European companies are committed to sustainability, and achieving carbon neutrality. Some North American jurisdictions, such as California and Quebec, have established cap-and-trade systems, creating a regional market for carbon allowances and offsets.

Many North American companies are setting ambitious sustainability goals, including achieving carbon neutrality. This has driven a demand for carbon offsets as a part of broad strategies to address environmental impact. Various governments and states have introduced policies and initiatives to address climate change, creating a supportive environment for the carbon offset market. North American entities are actively involved in international climate agreements, and collaborate with other regions to address global climate challenges. Growing the voluntary carbon offset market in the North American region is driving the growth in the market significantly.

Key Players

·         Verified Carbon Standard

·         Gold Standard

·         Climate Action Reserve

·         The Carbon Trust

·         Natural Capital Partners

·         The International Carbon Reduction, and Offset Alliance

·         UNFCCC’S Clean Development Management

·         South Pole Group

·         3Degrees

·         Other Players