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What Is The Present And Forecasted Size Of The Carbon Credit Market?

The scale of the carbon credit market has seen significant expansion in the past few years. Its growth is projected to rise from $526.32 billion in 2024 to $688.89 billion in 2025, achieving a Compound Annual Growth Rate (CAGR) of 30.9%. Factors contributing to the growth recorded in the historic period include international climate accords, corporate social responsibility (CSR) initiatives for renewable energy, forest preservation and reforestation, as well as projects aimed at reducing emissions.

In the forthcoming years, it is anticipated that the size of the carbon credit market is set to experience immense growth. By 2029, it is predicted to reach $1874.96 billion, growing at a Compound Annual Growth Rate (CAGR) of 28.4%. This projected growth during the forecast period is largely due to factors such as climate finance investments, the broadening of cap-and-trade systems, worldwide initiatives for carbon pricing, and a reduction in supply chain emissions. Significant trends expected throughout this period encompass carbon credit offset schemes, an influx of investments into carbon market endeavours, alignment with corporate strategies, the application of blockchain technology to enhance transparency, as well as the adoption of nature-based solutions.

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What Are The Primary Factors Supporting The Carbon Credit Market Expansion?

The increasing urgency to decrease worldwide carbon emissions is anticipated to boost the expansion of the carbon credit market in the future. Carbon emissions refer to the discharge of carbon-dioxide and other gases rich in carbon into the earth’s atmosphere. These emissions capture the sun’s heat, leading to global warming. Carbon credits associated with these emissions provide a financial motivation for companies to lower their emissions, aiding the environment by removing carbon from the atmosphere. They establish a solid structure for emission reduction and enhance economies through investments in environmentally friendly activities. For example, a report by the United States-based international institution, the United Nations Framework Convention on Climate Change in October 2022, pointed out that CO2 emissions must be reduced by 45% by 2030. Additionally, to confine the worldwide temperature increase to 1.5 degrees Celsius by the end of the century, emissions reductions must be around ten times higher, ranging between 1 to 2 billion tons annually. Consequently, the escalating need to decrease global carbon emissions is predicted to fuel the expansion of the carbon credit market.

How Is The Carbon Credit Market Categorized Across Applications And Types?

The carbon creditmarket covered in this report is segmented –

1) By Type: Compliance, Voluntary

2) By Project Type: Avoidance Or Reduction Projects, Removal Or Sequestration Projects

3) By End-Use: Power, Energy, Aviation, Transportation, Buildings, Industrial, Other End-Uses

Subsegments:

1) By Compliance: Regulated Carbon Markets, Cap-And-Trade Programs

2) By Voluntary: Voluntary Carbon Markets, Project-Based Offsets

How Are Market Trends Influencing Competition In The Carbon Credit Market?

A primary strategy for key players in the carbon credit market is enhancing innovative solutions like blockchain-based systems to ensure top-notch customer service. Blockchain-based solutions leverage blockchain technology to streamline an existing process or to tackle specific issues. For instance, Ernst & Young Global Limited, a professional services firm based in the UK, introduced EY OpsChain ESG in May 2023. This solution helps in tracing emissions and carbon credits via tokenization and is rooted in Ethereum, offering businesses an authentic emission overview, especially the ones finding it difficult to monitor and manage their carbon emissions accurately. It offers transparency to consumers, business partners, and regulatory bodies, facilitating decisions based on well-rounded information regarding environmental, social and corporate governance (ESG). Adhering to InterWork Alliance for Carbon Emissions Tokens standards, the EY OpsChain ESG allows enterprises to validate the authenticity of carbon offsets implemented for reducing environmental impacts. The solution was born from the idea that blockchains can serve as a connecting link between global ecosystems and corporate procedures across organizational frontiers.

Who Are The Most Influential Companies In The Carbon Credit Market?

Major companies operating in the carbon credit market report are NRG Energy Inc., Atos SE, WGL Holdings Inc., Sterling Planet Inc., AltaGas Ltd., EKI Energy Services Limited, Aker Carbon Capture AS, South Pole Group AG, Base Carbon Inc., ClimatePartner Gmbh, Bluesource LLC, 3 Degrees Inc., Carbon Care Asia Limited, Sustainable Travel International Inc., Cool Effect Inc., NativeEnergy Inc., Carbonbetter Inc., ClimeCo Corporation, Tasman Environmental Markets Pty Ltd., Carbon Credit Capital LLC, Carbonfund.org Foundation Inc., Clearsky Climate Solutions LLC, Climate Impact Partners LLC, ClimateTrade Inc., Climetrek Ltd., Finite Carbon Corporation, Forest Carbon Ltd., Moss Earth LLC, NatureOffice Gmbh, Terrapass Inc.

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Which Region Holds The Greatest Opportunity For Carbon Credit Market Expansion?

North America was the largest region in the carbon credit market in 2024. The regions covered in the carbon credit market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa

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