DUBLIN--(BUSINESS WIRE)--The "Global Carbon Credit Market: Analysis by Traded Value, Traded Volume, Segment, Project Category, Region, Size and Trends with Impact of COVID-19 and Forecast up to 2028" report has been added to ResearchAndMarkets.com's offering.
The global carbon credit market traded value was US$978.56 billion in 2022. The market is expected to reach US$2.68 trillion by 2028. at a CAGR of 18.23% during the forecast period of 2023-2028.
There is increasing regulatory and stakeholder pressure on global corporations to lower emissions. These trends are driving demand for carbon credits, giving rise to two sets of markets, which could grow meaningfully in the coming decades. At present, the overall carbon market is mainly characterized by the degree of regulation, namely the regulated compliance carbon market (CCM) and the unregulated voluntary carbon market (VCM).
The CCM is more mature and has historically generated stronger mitigation actions and incentives to decarbonize the economy than the VCM. CCM most commonly takes the form of an Emissions Trading System (ETS), which is also known as a cap and trade program, the largest of which is the European Union ETS. Article 6 of the Paris Agreement also contemplates an international market that allows for voluntary cooperation between two or more countries on emissions reductions.
Market Dynamics
Growth Driver
- Rising Carbon Emission
- Growing Coverage of Carbon Pricing Initiatives
- Increase in Carbon Pricing
- Increase in Adoption of Net Zero Targets
- Establishment of CORSIA
- Increasing Demand for Natural Climate Solutions
Challenges
- Insufficient Governance
- No Standard Measurement of Quality
- Difficulty in Mobilizing Potential Supply
- Problems of Homogeneity, Justice, Gaming, and Knowledge
Market Trends
- Increasing Number of Voluntary Carbon Market (VCM) Platforms
- Booming Venture Capital (VC) Deals in NBS/Carbon Removal
- Increasing Corporates Efforts in Carbon Offsetting
- Key Nationally Determined Contributions (NDC) Net-Zero Targets
- Key Initiatives Framing the Future
- Article 6 Agreement Redefining Global Carbon Offset Markets
- Carbon as a New Investment Asset Class
- Emergence of Carbon Credit Rating Agencies
Key Attributes:
| Report Attribute | Details |
| No. of Pages | 204 |
| Forecast Period | 2023 - 2028 |
| Estimated Market Value (USD) in 2023 | $1.16 Trillion |
| Forecasted Market Value (USD) by 2028 | $2.68 Trillion |
| Compound Annual Growth Rate | 18.2% |
| Regions Covered | Global |
Competitive Landscape
The key initiatives/ Emission Trading Systems (ETS) of the global carbon credit market are:
- EU ETS
- California Cap-and-Trade Program
- Regional Greenhouse Gas Initiative (RGGI)
- Korea Emissions Trading System
- UK ETS
- China National ETS
Market Segmentation Analysis
By Type:
In the report, the global carbon credit market traded value and traded volume has been analyzed based on two types: Compliance Carbon Market (CCM) and Voluntary Carbon Market (VCM). The compliance market is significantly larger than the voluntary market today.
The compliance carbon market is an important legislative tool for governments to bridge the gap between climate ambitions and policy actions. Paris Agreement & Broader Decarbonization Movement is the primary driver of compliance market demand. The growth of the compliance carbon market has been driven by higher carbon prices and the expansion of emissions coverage. Voluntary carbon market is expected to grow at a highest rate in the coming years.
By Segment:
The global compliance carbon market can be further segmented as Europe, North America, UK ETS, New Zealand, South Korea, China, and Certified Emission Reductions (CERs). In terms of market traded value and traded volume, Europe dominates the market. Europe has set itself an ambitious target to reduce emissions by 55% by 2030 (compared to 1990 levels). Once the shift from fossil fuels to green power is complete, the onus of further emissions reductions would move to Europe's hard-to-decarbonize industry.
By Project Category:
The voluntary carbon market are further segmented based on project categories, namely, Forestry and Land Use, Renewable Energy, Chemical Process/Industrial Manufacturing, Household/Community Devices, Waste Disposal, Energy Efficiency/ Fuel Switching, Agriculture, and Transportation.
Wherein, forestry and land use held the highest share both in terms of value and volume. From 2020 to 2021 REDD+ (type of forestry and land use projects) volumes rose dramatically, including an increase in the avoided unplanned deforestation project type and an increase in avoided planned deforestation.
Afforestation and Reforestation (ARR) projects have also seen tremendous growth in Asia and Latin America & the Caribbean between 2019-2022. The sharp increase in ARR projects in large part is due to developments in the Republic of China.
By Region:
In the report, the global voluntary carbon market is divided into six regions: Asia, Latin America, Africa, North America, Europe, and Oceania. Asia accounted for the maximum share of the global market value in 2022. In July 2022, HKEX announced the Hong Kong International Carbon Market Council to develop Hong Kong as an international carbon market and a hub for Asia.
The Hong Kong International Carbon Market Council would play a vital role in supporting the vision to build a carbon market, welcoming institutional and corporate participants from China, Asia, and around the world. Thus, the market is expected to grow in the coming years.
There has been an increase in participation in Latin American carbon markets due to the expansion of voluntary carbon markets, and ambitious climate goals established globally by governments and private actors, with the hydrocarbon industry leading the energy transition efforts in the region.
For more information about this report visit https://www.researchandmarkets.com/r/vusdxk
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