Market Outlook:
The global carbon offset/carbon credit trading service market size was valued at USD 210.8 Million in 2019 and is projected to reach USD 841.0 Million by 2027, expanding at a CAGR of over 19.9% during the forecast period 2020 - 2027.The market growth is attributed to the growing demand for selling and purchasing carbon credits for limiting greenhouse gas emissions.
A carbon offset is a calculable avoidance, sequestration, or lessening of carbon dioxide (CO2), and other Green House Gas (GHG) releases. Carbon offsets are defined as project-based as they normally comprise specific projects or events that decrease or evade appropriate emissions.
In investments in carbon-offset projects, individuals can fund GHG-reduction processes applied by individuals to decrease their carbon tax legal responsibility, which costs lesser than what could be accomplished through investment in a company's operations. Carbon offset/carbon credits are marketplace structures for the reduction of greenhouse gases emission. The greenhouse gas emissions limits are set by governments or regulatory agencies. Some companies cannot achieve an immediate reduction in emissions economically. Consequently, the companies can buy carbon credits to comply with the emission cap. Companies with carbon offsets (greenhouse gas (GHG) emissions reductions) are generally rewarded with additional carbon credits. The selling of credit surpluses can be used to subsidize potential pollution reduction programs.
The developing countries present in regions including Asia Pacific, Latin America, Africa, and others are undergoing rapid industrialization and simultaneously accounting for higher carbon emissions. With the emergence of new methods such as carbon offset/carbon credit trading services, the governments and other organizations operating across these regions are coming up with new rules and regulations to overcome environmental hazards and counter carbon emissions.
Carbon offset projects are evaluated and developed under particular standards and approaches that allow carbon credits to be supplied. Liability on the type of procedures used for the improvement of carbon credits can also be traded in voluntary markets of carbon credit. Offset projects can be classified rendering to either the technology engaged or type of GHG saving, or the specific practice selected to develop the project. The four most corporate categories of offset projects are renewable energy, biological sequestration, energy efficiency, and reduction of non-CO2 GHG emissions. Carbon offset practice describes factors and procedures required for calculating emission reductions by a carbon offset project during its lifespan. Project developers can use prevailing methods or develop new ones. Carbon offset practices have to be accepted by a regulatory body assigned to the management of a particular standard. This certifies that all carbon offset projects globally are established under the same practice.
The two types of credits are:
- Voluntary emissions reduction (VER): A carbon offset that is traded in the over-the-counter or voluntary market for credits.
- Certified emissions reduction (CER): Emission units (or credits) created through a regulatory framework to offset a project's emissions.
The key difference between the two is that, as opposed to the VER, there is a third-party certifying authority that regulates the CER.
Artificial Intelligence (AI) Impact on Carbon Offset/Carbon Credit Trading Service Market
Carbon offsets or credits are majorly used by companies to lower emissions, it is done by monitoring carbon footprints. Here Artificial Intelligence plays a crucial part as it helps in tracking these activities, predicting carbon emissions, and managing credits. By implementing Ai on carbon credit/credit offset-related operations, companies and organizations are able to track their investments and rely on the accuracy of data, which leads to an increase in investments in greenhouse gas reductions.
- For instance, in July 2023, Nvidia Corporation a tech company and a supplier of artificial intelligence (AI) hardware and software, revealed its new approach to carbon capture and storage (CCS) that engineers and scientists can use to accelerate carbon sequestration. It is a method to lower climate change by redirecting carbon deep underground.
Carbon Offset/Carbon Credit Trading Service Market Dynamics
Major Drivers
Growing number of tree plantations and emission avoidance from the atmosphere to remove carbon is expected to drive the market. Carbon credits help to remove carbon from the environment which in turn reduces the emission. Moreover, organizations and companies buy carbon credits to limit greenhouse gas (GHG) emissions which is further expected to boost the market.
- For instance, in July 2022, Aera Group, the largest originator and trader of African carbon credits, announced the signing of a carbon credits transaction with EDF Trading, a trader in the wholesale energy markets and part of EDF Group, a global leader in low-carbon energies.
Moreover, increasing demand for carbon credits is expected to drive the market. The supply of carbon credits is low owing to this companies are pre-purchasing to cover the emission limit, thus boosting the market in the forecast period.
Existing Restraints
Carbon offset projects have significant risks which can affect the environment as any carbon that is isolated, can be released back to the atmosphere which is expected to restrain the market. For instance, after the deforestation of trees such as palm oil and soy, there are potential risks they get government permission to use the land again for production activities.
Emerging Opportunities
Carbon credit investment as it provides exposure to investors with directly researching for companies is expected to create lucrative opportunities for the market. Carbon credits are easy to invest and companies gain profit as by investing in carbon credits, the companies further contribute to the emission-reduction strategy.
Segmental Outlook
Type Segment Analysis
On the basis of type, the carbon offset/carbon credit trading service market has been segmented into industrial, household, energy industry, and others. Industrial gases cause high amounts of global warming. The reduction of these gases is a very effective way to decrease greenhouse gases (GHG). Industrial gas offset projects are low-cost to conduct and produce large numbers of offsets; however, industries are reluctant to adopt the low-carbon economy.
Application Segment Analysis
In terms of application, the market has been divided into renewable energy, REDD carbon offset, landfill methane projects, and others. Reducing Emissions from Deforestation and Forest Degradation (REDD) is a concept that has been developed in the UN climate conferences as a way to reduce large-scale forest loss and allied CO2 emissions. Renewable Energy Certificates (RECs) and carbon offsets are both environmental supplies that can be used to address GHG emissions.
Regional Analysis
In terms of region, the global carbon offset/carbon credit trading service market has been fragmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. Europe constituted a significant share of the market in 2020 anddominates the global market, as the companies that emit greenhouse gases under the European Union Emission Trading Scheme (EU ETS) are compelled to reduce their greenhouse releases or purchase pollution allowances or carbon credits from the market. The volatile carbon prices in Europe are increasing the demand for carbon credit trading services hence, the market in the region holds a major share during the forecast period. The global leading polluters such as the US and China are yet to establish compulsory policies to reduce emissions. The market in Asia Pacific is projected to expand at a considerable CAGR during the forecast period. Growing population and infrastructure in the region are expected to drive the market during the forecast period. Nearly 60% of the world’s population is residing in Asia Pacific and the number of infrastructures and buildings is also increasing thus, resulting in huge climate change and carbon emissions.
Asia Pacific encounters nearly 4.3 billion population among which almost 2 billion live in urban areas which is expected to rise by the next few years. To ensure the healthy growth of the population, it is highly essential to mitigate emissions. Moreover, companies are undertaking various initiatives for carbon offsetting which is further contributing to the market in the region.
- For instance, in August 2022, Visa, a leader in digital payments, announced the launch of Visa Eco Benefits in Asia Pacific. Eco Benefits is a collection of sustainability-focused solutions that are expected to help Visa cardholders across the region to understand the environmental impact of their day-to-day payments. Users are able to calculate the carbon footprint generated by Visa transactions, and access options for carbon offsetting-or charitable donations from the bank's website or app.
Key Benefits for Industry Participants & Stakeholders
- In-depth analysis of the global carbon offset/carbon credit trading service market
- Historical, current, and projected market size in terms of value
- Potential & niche segments and regions exhibiting promising growth covered
- Industry drivers, restraints, and opportunities covered in the study
- Recent industry trends and developments
- Competitive landscape & strategies of key players
- A neutral perspective on global carbon offset/carbon credit trading service market performance
Segments
By Type
- Industrial
- Household
- Energy Industry
- Other
By Application
- REDD Carbon Offset
- Renewable Energy
- Landfill Methane Projects
- Others
By Region
- North America
- U.S.
- Canada
- Latin America
- Brazil
- Mexico
- Rest of Latin America
- Europe
- U.K.
- France
- Germany
- Italy
- Spain
- Russia
- Rest of the Europe
- Asia Pacific
- Middle East & Africa (MEA)
- Saudi Arabia
- South Africa
- UAE
- Rest of MEA
Key Market Players Profiled in the Report
- 3Degrees.
- Aera Group SAS
- ALLCOT
- Bioassets
- Biofílica Ambipar Environment
- Carbon Credit Capital, LLC.
- China Beijing Equity Exchange.
- EcoAct.
- Forest Carbon
- GreenTrees
- guangzhou green stone carbon asset management co., ltd.
- Native Energy
- Schneider Electric
- South Pole
- Terrapass
- Waycarbon.
Competitive Landscape
The global carbon offset/carbon credit trading service market is dominated by key players such as 3Degrees.; Aera Group SAS; ALLCOT; Bioassets; Biofílica Ambipar Environment; Carbon Credit Capital, LLC.; China Beijing Equity Exchange.; EcoAct.; Forest Carbon; GreenTrees; guangzhou green stone carbon asset management co., ltd.; Native Energy; Schneider Electric; South Pole; Terrapass; and Waycarbon. Market players are pursuing acquisitions, product launches, collaborations, and geographic expansion to leverage untapped opportunities in the global Carbon Offset/Carbon Credit Trading Service market.
- In July 2023, A new tool that will provide transparency and confidence to carbon projects was announced at the closing of the Latin American Climate Summit held in Panama, as one of the best to face the challenges of the Carbon Market in 2023. This tool is in the experimental stage and was designed so that annual reports can be made regardless of the stage of the project, from pre-feasibility to verification and certification.
- In January 2023, one of the world’s leading international experts for corporate climate action, ClimatePartner, teams up with Aera Group S.A.S., one of the largest originators of high-quality climate projects, to launch the Africa Energy Access Carbon Cooperation. This new program focuses on accelerating renewable energy projects in various countries across Africa through carbon finance support.
- In July 2022, Aera Group SAS, the leading originator and trader of African carbon credits announced the execution of a new transaction with Ecosphere+ Ltd, one of the largest worldwide nature-based solutions offsets provider.
