The global carbon credit market consists of various mechanisms & programs that provide incentives for activities aimed at reducing or eliminating greenhouse gas emissions. Carbon credits are certificates issued by regulatory bodies such as government agencies for reducing emissions of carbon dioxide or other greenhouse gases. Companies or countries involved in activities that reduce emissions below a specified level can sell excess credits to entities whose emissions exceed permitted levels. This enables companies & nations to meet emission reduction targets in a financially cost-effective manner. Carbon credits are an important tool in mitigating climate change by monetizing the negative externalities associated with greenhouse gas emissions.
The global carbon credit market is estimated to be valued at US$ 36.34 Mn in 2024 and is expected to exhibit a CAGR of 3.0% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market key trends
Increasing government regulations regarding climate change and carbon emission reduction targets set by countries worldwide are major drivers of growth of the carbon credit market. Many nations have pledged to become carbon neutral and aim to cut emissions to net zero by mid-century under the Paris Agreement. This is increasing demand from both private and public sectors to purchase carbon credits to balance their carbon liabilities. Moreover, growing carbon pricing initiatives such as carbon taxes and emissions trading schemes are providing a formal pricing signal that is encouraging more entities to explore the carbon offsetting approach using carbon credits. Advancements in carbon accounting methods are also helping improve the transparency and integrity of carbon credits, thereby boosting confidence among market participants.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate due to high start up costs. However, the market is still emerging.
Bargaining power of buyers: The bargaining power of buyers is high as there are many options available in the market. Buyers can negotiate on price and demand other value additions.
Bargaining power of suppliers: The bargaining power of suppliers is moderate since raw materials required for manufacturing are available and process technology is standardized.
Threat of new substitutes: The threat of new substitutes is low as there are limited options available for carbon credits.
Competitive rivalry: Competition in the market is high as key players are focusing on new product development and geographic expansion to gain market share.
Key Takeaways
The Global Carbon Credit Market Size is expected to witness high growth. The global carbon credit market is estimated to be valued at US$ 36.34 Mn in 2024 and is expected to exhibit a CAGR of 3.0% over the forecast period 2024 to 2031.
Regional analysis – North America dominates the market currently due to stringent environmental regulations. Asia Pacific is expected to grow at the fastest pace during the forecast period due to growth in manufacturing industries in countries like China and India.
Regional analysis – Europe holds a significant share in the carbon credit market due to stringent emission standards imposed by European Commission. The UK, Germany, and France are the major contributors to the regional market.
Key players operating in the Carbon Credit Market are ASLAN Pharmaceuticals, Takeda Pharmaceutical Company Limited, CHIESI Farmaceutici S.p.A., CSL, NIOX, Fountain Therapeutics, Eli Lilly and Company, GSK plc., Infinity Pharmaceuticals, Inc., Mabtech, Kineta Inc., Marinomed Biotech AG, Mycenax Biotech Inc., AstraZeneca, and Panacea Biotec.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
