Carbon Credit Market size was over USD 119.6 billion in 2024 and is estimated to reach USD 639.8 billion by the end of 2037, expanding at a CAGR of 15% during the forecast timeline, i.e., 2025-2037. In 2025, the industry size of carbon credit is evaluated at USD 137.5 billion. Increasing revenue from carbon trading is influencing this industry to boom and enlarge. According to the World Bank, the carbon pricing revenue reached over USD 104 billion by 2023. This further encourages to establishment of more crediting frameworks. Increased profit from these offset industries is also encouraging other private organizations to invest.
Sustainability goals set by corporations and other financial institutions have driven the inflating number of credit purchases. Many corporate and financial institutions are investing in the carbon credit market, considering it to be an asset. This further enables easier access for participants by creating new investment fields. They are also showing interest in crediting as a part of their ESG Strategies while meeting emission targets. For instance, in October 2024, CFC partnered with BACX and Lockton to launch the first exchange crediting trade in Latin America. The leading insurance provider sees this collaboration as an investment to ensure transaction security with voluntary carbon credits.
Growth Drivers
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
15% |
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Base Year Market Size (2024) |
USD 119.6 billion |
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Forecast Year Market Size (2037) |
USD 639.8 billion |
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Regional Scope |
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Type (Voluntary, Compliance)
In terms of type, the compliance segment is anticipated to account for more than 96.9% carbon credit market share by the end of 2037, due to legally mandated emission control practices. Increased participation from public authorities, governments, and other entities to achieve compliance with the commenced standards is inflating the investment in this segment. According to a PIB report published in July 2024, the administrator of CCTS, the BBE is focusing on determining the integrity of carbon projects. They are contributing to set growth in this segment by educating verification agencies to bring clarity to compliance-based trading. Such initiatives are inspiring more private leaders to purchase carbon credit while complying with government-set limits.
End use (Agriculture, Carbon Capture & Storage, Chemical Process, Energy Efficiency, Industrial, Forestry & Landuse, Renewable Energy, Transportation, Waste Management)
Based on end use, the carbon credit market is estimated to register significant growth for the forestry & landuse segment by 2037. Global efforts to mitigate climate change due to emissions are inflating the segment to grow. As trees are one of the excellent natural CO2 absorbers, forestry is considered to be a valuable tool for reduction projects. Afforestation, reforestation, forest conservation, and preventing deforestation are the key methodologies of this segment. Companies are focusing on developing new standards for qualifying reforestation for credit generation. For instance, in July 2024, VERRA launched the new market label, ABACUS to secure the quality of carbon credits from ecosystem restoration and reforestation projects.
Our in-depth analysis of the global carbon credit market includes the following segments:
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Type |
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End use |
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Europe Market Statistics
Europe carbon credit market is projected to dominate revenue share of around 74.2% by the end of 2037, due to collaborative efforts towards environmental sustainability. The growth is significantly driven by ambitious climate goals and regulatory frameworks. The region is home to one of the largest carbon markets EU ETS, influencing companies to lead the landscape. The region is issuing verifying systems to detect legitimate credits to reduce greenwashing threats. According to an IISD report published in December 2023, the European Union released a carbon removal certification framework to detect liability of all carbon credit claims. This further leads to the prevention of misleading claims and preserves market reputation.
The U.K. has established a prominent position in the carbon credit market through its advanced pricing mechanism. The country is now investing to escalate its credit generation to consolidate its global presence. Leading companies are also contributing to achieving the neutrality target by 2050. For instance, in July 2024, Changeblock acquired JustCarbon to magnify its carbon-capturing and removal technology by accessing high-integrity projects of JustCarbon. This acquisition will scale its operational activities to increase its value from USD 6.2 million to USD 350 million. Such strategic plans are further accelerating the trading ecosystem of the UK.
Italy is also leveraging its progress in the carbon credit market with its innovative biodiversity, restoration, and agroforestry projects. Many private companies are collaborating and investing to create their domestic trading funds for international participation. For instance, in October 2024, Respira partnered with Palladium to launch new nature-based carbon credit funds for corporates to secure offset emissions. The two new funds, Respira Carbon 2 and Vivair will help to raise supporting investments from around the world. The country’s net-zero target is further inducing unique credit-generating methods to create a new source of income for low-income populations including farmers.
North America Market Analysis
North America is expected to generate notable revenue from the carbon credit market through its advanced technology, improving trading infrastructure. The region is qualifying to be one of the largest suppliers through its success in both compliance and voluntary segments. Regional GHG capturing and reducing initiatives are creating a profitable way of generating additional revenue for various businesses. The supportive regulatory framework is also contributing to this process by issuing supportive policies, programs, and schemes. The emission allowances further encourage companies to participate in the trading system. In addition, the popularity of certification and standards has increased the scalability of credits to reduce emissions.
The U.S. is witnessing great progress in achieving neutrality through engaging in the carbon credit market. The cooperative effort of several states across the country has enlarged the sector. Technologically advanced trading companies are introducing innovative solutions to connect sellers and buyers. For instance, in September 2024, VERRA collaborated with EPİAŞ to avail certified exchange-based credits through a platform. This credit trading platform will provide transparency and regulatory compliance while facilitating trade through an exchange.
Canada is also following the regional growth to be one of the leading countries in compliance carbon credit market. The federal government has set the carbon price floor to stabilize the trading for provinces without a system. Authorities such as in British Columbia and Quebec have already created their cap-and-trade program to cover industries including energy production and transportation. The country further plans to release updated regulations to standardize the trading process for supplying verified carbon allowances.
The carbon credit market is expected to realize the net-zero target through collaboration and innovations. Many voluntary programs and projects are being launched to unite multi-scale businesses to offset carbon emissions. For instance, in August 2024, Climate Impact Partner launched a new carbon dioxide removal program to elevate novel eliminating technologies. The program is going to be financed by a team of SMEs and MNCs to meet the neutrality goal of 2050 by reducing 10 billion tons of CO2 each year. The land & reforestation segment is also in focus. In December 2023, the World Bank planned to produce over 126 million credits with 15 countries by 2028. The credits are expected to earn around USD 2.5 billion through reforestation. Such key players include:
Author Credits: Rajrani Baghel
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