The climate and carbon finance market provides financing for projects that reduce greenhouse gas (GHG) emissions or enhance carbon sinks. These projects include renewable energy, emission reduction initiatives, reforestation, and clean cooking. Carbon offset projects allows organizations and individuals to neutralize their carbon footprint by financing activities like renewable energy installations, forest conservation, or methane capture projects.
The global climate and carbon finance market is estimated to be valued at US$ 459.58 Mn in 2023 and is expected to exhibit a CAGR of 3.6% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
The emergence of carbon offset and clean energy projects is one of the key trends driving the growth of the climate and carbon finance market. Various companies and governments are undertaking huge investments and launching multiple carbon offset projects across the world to meet their emission reduction targets. They are financing initiatives involving renewable energy generation, construction of wind and solar farms, distribution of efficient biomass stoves etc. through carbon credits. Such large-scale investments in offset projects is fueling the demand for climate finance. Increased participation of private players and availability of carbon credits is also encouraging the development of more such projects, thereby accelerating the market growth over the forecast period.
Segment Analysis
The global climate and carbon finance market is divided into internal carbon pricing and voluntary carbon market segments. The internal carbon pricing segment currently dominates the market owing to stringent government policies and regulations mandating adoption of carbon pricing mechanisms by companies. It involves implementation of carbon taxes or emissions trading schemes within countries/regions to mitigate climate change. The voluntary carbon market segment is expected to witness higher growth during the forecast period due to growing demand from companies looking to achieve carbon neutrality targets voluntarily through carbon offsetting projects.
Key Takeaways
The global climate and carbon finance market size is expected to witness high growth during 2023 - 2030 period. The global climate and carbon finance market is estimated to be valued at US$ 459.58 Mn in 2023 and is expected to exhibit a CAGR of 3.6% over the forecast period 2023-2030.
Regional analysis:
Europe accounts for the largest share in the climate and carbon finance market currently due to the presence of well-established emissions trading system in EU countries. The region's stringent climate policies and early action on climate change mitigation and adaptation measures have boosted carbon finance activities. The Asia Pacific region is poised to dominate market growth over the forecast period with China and India emerging as high potential markets supported by expansion of emissions trading pilots and carbon offset programs in these nations.
Key players:
Key players operating in the climate and carbon finance market are International Paper Company, Georgia-Pacific, Weyerhaeuser Company, Stora Enso, Kimberly-Clark Corporation. Majority of key players are focusing on investing in afforestation and reforestation projects across various geographies to generate carbon credits for compliance and voluntary markets. Companies are also actively pursuing acquisitions to strengthen their footprint and service offerings in this space.
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