Forestry & Landuse Carbon Credit Market size is expected to reach USD 67 billion by the end of 2036, growing at a CAGR of 14% during the forecast period, i.e., 2024-2036. In the year 2023, the industry size of forestry & landuse carbon credit was close to USD 23 billion. This growth of the revenue in the market is poised to be encouraged by the growing prevalence of deforestation. Grass deforestation in the world reached over 6 million hectares and the situation in tropical forests is set to be worse where Denmark-sized land has been lost. As a result, the demand for forestry & landuse carbon credit is predicted to rise.
Furthermore, strict regulations have been launched by regulatory bodies which is further influencing the organizations to understand their responsibility towards the environment and additionally boosting their desire to increase environmental credentials. They are achieving this by purchasing carbon credits hence displaying their commitment towards sustainability. Therefore, this element is also poised to encourage the market expansion for forestry & landuse carbon credit over the years to come.
Growth Drivers
Challenges
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Base Year |
2023 |
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Forecast Year |
2024-2036 |
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CAGR |
~8.30% |
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Base Year Market Size (2023) |
~ USD 23 Billion |
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Forecast Year Market Size (2036) |
~ USD 67 Billion |
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Regional Scope |
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Type (Voluntary, Compliance)
The voluntary segment is predicted to account for 60% share of the global forestry & landuse carbon credit market during the forecast period. Similar to the compliance segment, the voluntary segment focuses on influencing the total reduction of emissions. This need is influenced by a growing consciousness regarding the environment. Voluntary carbon credits offer a channel for entities to examine their dedication to sustainability and environmental management further than regulatory requirements. Therefore, as the intensity of awareness about climate change grows, the necessity for voluntary forestry and land use carbon credits rises, further encouraging market revenue to grow.
Type (Voluntary, Compliance)
The compliance segment in the forestry & landuse carbon credit market is also set to have significant growth in the revenue during the forecast period. Compliance markets are developed and operated by mandatory national, regional, or international carbon reduction programs. Generally, commune to as cap-and-trade markets or emission trading systems (ETS), these are markets in businesses within capped sectors, that are required to not exit than their regulated greenhouse gas (GHG) emissions cap. If the emission crosses the cap, the organization must offset by reducing the emissions in order places, with such transactions happening within the compliance market. Moreover, various regulations have been launched by several countries to influence compliance. For instance, regulated entities are presently allowed to offset only over 3% of their emissions under the California Cap-and-Trade Program, to achieve total compliance, and close to 49% of those offset credits should essentially come from projects that benefit California directly.
Our in-depth analysis of the global market includes the following segments:
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Type |
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North American Market Forecast
The North America market for forestry & landuse carbon credit market is set to generate the highest revenue share of over 35% over the forecast period. This growth of the market is set to be dominated by the growing production of timber production. For instance, the wood industry in the United States of America manufactured over 63,416 thousand m3 of softwood lumber in 2021. Furthermore, the housing industry is also significantly relying on wood in this region on account of growth in a change in customer preference. As a result, the clearance of forests is rising which is why strict rules have been imposed by the government. Therefore, the adoption of forestry & landuse carbon credit is set to rise in this region. Moreover, this region is also highly prone to wildfire. Consequently, such an event has caused huge damage to the forest. As a result, the need for forestry & landuse carbon credit is predicted to rise in order to initiate reforestation.
European Market Analysis
The Europe market for forestry & landuse carbon credit is also set to have notable growth in the revenue over the coming years. This growth is set to be dominated by growing urbanization in this region. Urban growth causes the conversion of forests into commercial spaces, and residential areas, along with infrastructure projects, which are becoming a major factor for deforestation. The development of highways, roads, and industrial zones often requires cutting of large swaths of forests, hence influencing habitat loss and fragmentation. Hence, the need for forestry & land carbon credit is growing in this region. Furthermore, the population in this region is becoming aware of the adverse effects of excessive deforestation. As a result, in order to have a reputative presence in the region, organizations are working towards sustainable practices. Therefore, the market for forestry & landuse carbon credit is predicted to observe growth in this region.
Author Credits: Dhruv Bhatia
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