Market Overview:
The global carbon credit market deals with trading of pollution permits or credits between participants in the market. Carbon credits are permits that allow the holder to emit one tonne of carbon dioxide or other greenhouse gases. Carbon offsets, when purchased, reduce the amount of direct carbon emissions and compensate for emissions made elsewhere. They allow buyers to emit a certain amount of greenhouse gases into the atmosphere.
Market key trends:
Demand for carbon offsets from the cloud computing segment is steadily rising in the market. With an increasing number of organizations switching to cloud-based services, the need to offset carbon emissions from data centers is growing. Cloud service providers are investing in carbon removal projects and purchasing more carbon credits to achieve carbon neutrality goals. For example, companies such as Microsoft, Amazon, and Google have committed to removing more carbon than they emit by 2030 by investing in forestation and other carbon sequestration projects. This rising demand from the cloud computing industry is expected to be a major driver for the carbon credit market over the coming years.
Segment Analysis
The global carbon credit market is segmented by type, source, and regional analysis. The compliance segment dominated the market in 2022, accounting for over 60% of the total share, owing to strict government regulations to limit carbon emissions. However, the voluntary segment is expected to register the highest CAGR during the forecast period. This growth can be attributed to increasing focus on corporate social responsibility and reputation among organizations to reduce their carbon footprint voluntarily.
Key Takeaways
Global Carbon Credit Market Demand is expected to witness high growth, exhibiting a CAGR of 24% over the forecast period, due to increasing concerns regarding climate change and stringent environmental policies worldwide.
By region, Europe dominated the global carbon credit market in 2022 and is expected tomaintain its leading position during the forecast period as well. This can be attributed to the presence of major carbon credit traders and brokers in the region. However, Asia Pacific is projected to witness the fastest growth over the next few years due to rapid industrialization and urbanization in major economies like China and India.
Key players operating in the global carbon credit market are WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Clear Sky Climate Solutions, Sustainable Travel International, 3 Degrees, terrapass, and Sterling Planet, Inc. WGL Holdings, Inc. is one of the largest distributors of natural gas in the U.S. and is actively involved in carbon reduction projects.
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