Carbon credits, also known as carbon offsets, are certificates or allowances that represent the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas. Carbon credits allow companies and governments to emit a certain amount of carbon dioxide or other greenhouse gases into the atmosphere by paying someone else to offset an equivalent amount elsewhere. This allows entities to invest in eco-friendly solutions to reduce their carbon footprint while still accessing energy for heating, transportation or industrial processes. The global Carbon Credit Market is estimated to be valued at US$50 billion in 2023 and is expected to exhibit a CAGR of 3.0% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
The increasing emphasis on reduction in carbon emissions has been one of the major factors propelling the growth of the Global Carbon Credit Market Size. Various government policies and initiatives aimed at curbing greenhouse gas emissions and promoting a transition to a greener economy have increased the demand for carbon credits. Both regulatory and voluntary carbon markets have witnessed significant growth over the past few years due to stringent climate targets adopted by various countries. Various companies have also incorporated internal carbon pricing initiatives to offset their emissions and progress towards sustainability goals, thus driving market growth. Corporate demand for carbon credits is expected to surge in the coming years due to rising awareness about climate change impacts.
SWOT Analysis
Strength: Some key strengths include supportive government policies and regulations to achieve carbon emission targets and increase adoption of renewable energy sources. Growing awareness about global warming and climate change is also driving the market.
Weakness: High initial setup and certification costs associated with carbon credit projects can act as a barrier, especially for small companies. Verification and certification of carbon reduction achievements is a complex process requiring technical expertise.
Opportunity: Establishment of carbon trading platforms and markets in developing regions provides new business opportunities. Growing emphasis on achieving net-zero emissions goals through investments in renewable energy and clean technologies will boost demand.
Threats: Changes in international climate change agreements and environmental policies of different countries pose risks. Economic slowdowns can negatively impact demand growth in the short-term. Rising geopolitical tensions between countries is another threat.
Key Takeaways
The global carbon credit market is expected to witness high growth supported by stringent regulations and policies promoting reduction in greenhouse gas emissions.
The market in the Asia Pacific region is estimated to grow at the fastest pace during the forecast period due to rapid industrialization and rising energy demands in countries such as China and India. Several projects and initiatives are being undertaken to offset carbon emissions through renewable sources of energy such as solar and wind power in the region.
Key players operating in the carbon credit market are South Pole, 3Degrees, Terrapass, Green Mountain Energy, Schneider, EcoAct, and Forest Carbon. These companies offer carbon offsetting and emission reduction solutions utilizing innovative technologies and methodologies. Strategic collaborations between industry players and governments are on the rise to establish carbon neutral goals and accelerate the transition to cleaner sources of energy worldwide.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it