The global carbon credit market is a mechanism that allows countries, companies and individuals to offset their carbon emissions by buying carbon credits from emission-reducing projects. Such projects include renewable energy installations, energy efficiency programs, forestry programs etc. The demand for carbon credits is growing as organizations aim to achieve carbon neutrality targets and governments impose stricter emission regulations.

The global carbon credit market is estimated to be valued at US$ 36.34 Mn in 2024 and is expected to exhibit a CAGR of 3.0% over the forecast period 2024-2031, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:
The growing emphasis on achieving carbon neutrality targets among companies and governments across the globe presents a major opportunity for the carbon credit market. Many countries have pledged to achieve net zero emission targets by 2050 and mid-century, which will significantly boost the demand for carbon credits. Organizations are increasingly investing in carbon offset programs to neutralize their operational greenhouse gas emissions. The carbon credit mechanism allows them to meet their emission reduction commitments in a cost-effective manner. Additionally, implementation of stringent carbon pricing policies by regulatory agencies is likely to incentivize more investments towards carbon neutral projects, thereby driving the sales of carbon credits over the forecast period.

Porter's Analysis
Threat of new entrants: Low as high investment barriers exist to establish trading platforms and platforms operate within a structured regulatory framework set by governments.

Bargaining power of buyers: Moderate as major buyers are corporations and governments with negotiating power to procure credits in bulk at competitive prices.

Bargaining power of suppliers: High as major suppliers are developing countries with extensive forests and renewable energy sources able to scale capacities as per demand.

Threat of new substitutes: Low as carbon credits offer the only standardized means currently for companies to offset carbon footprints.

Competitive rivalry: Intense as players compete based on pricing, product differentiation, and market penetration.

SWOT Analysis
Strengths: Emissions reduction mechanism with potential to drive sustainable investments. Standardized certification brings clarity and transparency to the market.

Weaknesses: Fragmented regulatory landscape across regions challenges universal acceptance and compliance. Accounting and verification difficulties undermine credibility of credits in the short term.

Opportunities: Growth in corporate social responsibility programs driving demand from private sector. Technological advances aiding monitoring, reporting and verification critical for market expansion.

Threats: Policy and regulatory changes in major procuring nations impact broader participation and commitments. Macroeconomic forces like recession adversely impact credit purchases.

Key Takeaways
The Global Carbon Credit Market Size is expected to witness high growth over the forecast period. Major drivers include rising environmental awareness and expanding portfolio of initiatives targeting net-zero emissions goals across industries and nations. According to estimates, the market valued at US$ 36.34 Mn in 2024 is projected to reach over US$ 62 Mn by 2031, reflecting a CAGR of around 3.0% during the forecast period.

Regional analysis indicates Asia Pacific dominates currently due to the presence of high carbon-emitting economies investing heavily in offsets as an affordable interim solution to curb emissions. China leads as the largest carbon market globally while other emerging markets are also implementing carbon pricing mechanisms and trading schemes. North America and Europe continue making progress toward carbon neutrality through renewable energy expansion and innovative offset programs.

Key players operating in the global carbon credit market are ASLAN Pharmaceuticals, Takeda Pharmaceutical Company Limited, CHIESI Farmaceutici S.p.A., CSL, NIOX, Fountain Therapeutics, Eli Lilly and Company, GSK plc., Infinity Pharmaceuticals, Inc., Mabtech, Kineta Inc., Marinomed Biotech AG, Mycenax Biotech Inc., AstraZeneca, and Panacea Biotec. Major players compete based on a variety of offset project types, regional coverage, and leveraging blockchain/digital technologies.

 

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