The Global Carbon Credit Market Is Witnessing High Growth Owing To the High Rate of Carbon Emissions in the World


Carbon Credit Market
Carbon Credit Market

Carbon Credit Market, By Sector (Energy, Transportation, Residential and Commercial Buildings, Industry, Agriculture, Forestry, and Water and Wastewater), and by Region (North America, Europe, Asia Pacific, Latin America, and Middle East & Africa) - Size, Share, Outlook, and Opportunity Analysis, 2020 - 2027.

The carbon credit is a tradable permit, granting companies the right to emit a certain amount of greenhouse gas. It represents one metric ton of carbon dioxide equivalent. Credits can be purchased or traded by individuals or businesses, and are issued in different forms. Currently, the voluntary market for carbon credits is fragmented and lacking in transparency. This makes it difficult to verify projects and determine how they are contributing to the reduction of greenhouse gas emissions. Moreover, it is possible for sellers to receive only part of the demand for the credits. Because of this, it is also possible for fraudulent activities to occur. Carbon credits are issued to companies that meet emissions caps. Typically, a company is given a set number of credits to offset its emissions every year. However, there are some companies that produce more than they are entitled to. As a result, they look to the regulatory market to trade these credits.

The global Carbon Credit Market was valued at US$ 211.5 Bn in 2019 and is expected to reach US$ 2,407.8 Bn by 2027 at a CAGR of 30.7% between 2020 and 2027.

Major players operating in the global carbon credit market include Sterling Planet, Inc., Terrapass, 3 Degrees, Sustainable Travel International, ClearSky Climate Solutions, Cool Effect, Inc., Native Energy, Green Mountain Energy, Enking International, and WGL Holdings, Inc.

Key Market Drivers:

The alarming rate of carbon emission in the world is expected to augment the growth of the global carbon credit market. For instance, according to the European Union, the worldwide CO2 emissions from industries and fossil fuels increased by around 5.3% in 2021 and reached a recorded high of around 37.12 billion metric tons (GtCO₂). If the market for carbon credits were to increase, it would be necessary to establish a clear, uniform taxonomy to classify and price the attributes of the credits. Attributes could include the quantity of the carbon emission, the source of the emission, and the country of origin. A common taxonomy could help to create a robust, liquid, and sustainable market. By doing so, the market would be able to better manage risk. Moreover, advanced technologies related to carbon emission reduction are estimated to enhance the growth of the global market.

Covid-19 Impact Analysis:

During the COVID-19 pandemic, GHG emissions and pollution levels have decreased across the world as nations imposed restrictions and lockdowns in order to contain the spread of the COVID-19 infection. In this way, COVID-19 brought a short-term ecological benefit and drove the growth of the global market.

Key Takeaways:

North America is expected to dominate the growth of the global market, owing to the high levels of carbon emission in the region. For instance, according to the United States Energy Information Administration (EIA), energy consumption in the U.S. created around 4.9 billion metric tons of carbon dioxide (GtCO₂) in 2021.

The Asia Pacific is estimated to witness high growth in the global market, owing to the increasing prevalence of environmental organizations in the region. For instance, according to Our Endangered World, there are around 13 major environmental organizations in India.

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