Carbon Offsets Market Size, Share, Growth, and Industry Analysis, By Type (Forestry, Renewable Energy, Waste Disposal, and Others), By Application (Personal and Enterprise), Regional Insights, and Forecast To 2032

Updated On: 15 April 2024

Carbon Offsets Market REPORT OVERVIEW

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global carbon offsets market size was USD 210.7 million in 2022 and market is projected to touch USD 256 million by 2029 at CAGR 3.3% during the forecast period. 

The COVID-19 pandemic has been unprecedented and staggering, with carbon offsets experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

Carbon offsetting involves compensating for CO2 emissions by investing in projects that reduce or remove an equivalent amount of carbon dioxide from the atmosphere. Individuals, companies, or organizations calculate their emissions and purchase carbon offset credits from verified projects, such as reforestation, renewable energy, and methane capture. These projects aim to counterbalance emissions and can contribute to climate change mitigation.

However, carbon offsetting should complement, not replace, direct emission reduction efforts, as its effectiveness and potential pitfalls, like greenwashing and uncertainty, have sparked debates. To ensure meaningful impact, transparency and a comprehensive approach to emission reduction are essential.

COVID-19 IMPACT: Reduced Demand for Offsets to Hamper Demand Significantly

COVID-19 had a life changing impact globally. The carbon offsets market was significantly affected. The virus had various impacts on different markets. Lockdowns were imposed in several nations. This erratic pandemic caused disruptions on all sorts of businesses. Restrictions tightened during the pandemic due to increasing number of cases. Numerous Industries were affected. However, the market for carbon offsets experienced a reduced demand.

The economic slowdown and travel restrictions during the pandemic led to a decrease in activities that generate carbon emissions, such as travel and industrial production. As a result, some individuals and companies saw reduced carbon footprints and may have felt less urgency to invest in carbon offsets. Many carbon offset projects, such as reforestation or renewable energy installations, faced delays or cancellations due to disruptions in supply chains, labor shortages, and financial constraints. This affected the availability of offset projects for individuals and organizations seeking to purchase offsets.

The pandemic highlighted the interconnectedness of global systems and the need for proactive measures against crises. This awareness extended to climate change, encouraging discussions about the importance of environmental sustainability and carbon reduction strategies, including offsetting. The pandemic prompted discussions about reshaping economies and societies to prioritize sustainability. This could lead to more attention on carbon offset projects and sustainable initiatives as part of broader recovery plans. The market is anticipated to boost the carbon offsets market share following the pandemic.

LATEST TRENDS

"Nature-Based Solutions to Broaden Market Growth"

There was a focus on nature-based solutions, including reforestation, afforestation, and conservation projects. These projects not only sequester carbon but also have co-benefits for biodiversity, ecosystem health, and local communities. Advances in technology, such as satellite monitoring and data analytics, were improving the accuracy of measuring carbon emissions and the effectiveness of offset projects. This allowed for better tracking and verification of emissions reductions.

Blockchain technology was being explored as a way to enhance transparency and traceability in carbon offset markets. It could help ensure that offset credits are accurately tracked and verified. Some innovative offset projects were being explored, such as direct air capture technology, which involves removing carbon dioxide from the atmosphere using engineered systems. These latest developments are anticipated to boost the carbon offsets market growth.

Carbon Offsets Market SEGMENTATION

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• By Type

Based on type, the market is divided into forestry, renewable energy, waste disposal, and others.

Forestry holds a major share of the global market.

• By Application

Based on application, the market is bifurcated into Personal and Enterprise.

Personal as application holds a major share of the global market.

DRIVING FACTORS

"Corporate Social Responsibility (CSR) to Boost Market Share"

Many companies recognize the importance of environmental sustainability as part of their CSR initiatives. Commitments to reduce or offset carbon emissions demonstrate their dedication to ethical and responsible business practices. Increasing global awareness of the detrimental effects of climate change has led individuals, companies, and governments to seek ways to reduce their carbon footprint and contribute to global climate mitigation efforts.

"Emission Reduction Challenges to Boost Market Size"

For some industries, achieving complete emission reductions within their operations is challenging due to technological limitations or economic constraints. Carbon offsetting provides an avenue to compensate for these emissions while seeking long-term solutions. Many organizations and even countries have set goals to achieve net-zero emissions or carbon neutrality by a certain date. Carbon offsetting is often used as a tool to bridge the gap between current emissions and these ambitious targets. These factors are anticipated to drive the carbon offsets market share.

RESTRAINING FACTORS

"Additionality and Double Counting to Hamper Market Share"

Ensuring that offset projects are additional—meaning they wouldn't have happened without the offset funding—and avoiding double counting of emissions reductions can be complex and require rigorous accounting mechanisms. The quality and credibility of carbon offset projects can vary widely. Some projects might not deliver the promised emissions reductions, leading to concerns about "greenwashing" and undermining the legitimacy of offsetting efforts. The carbon offset market can be complex and lacks standardized protocols and transparency in some cases. This complexity can be a barrier for individuals and companies trying to navigate offset options. The factors are anticipated to hinder the growth of the carbon offsets market share.

Carbon Offsets Market REGIONAL INSIGHTS

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"Europe Dominates the Carbon Offsets Market "

Europe is the major shareholder for the carbon offsets market share. The European Union has been a leader in climate policy and sustainability efforts. The EU's Emissions Trading System (ETS) and various national initiatives have driven demand for carbon offsets within the region. Some of the common factors driving demand for carbon offsets include regulatory requirements, corporate sustainability goals, international commitments, reputational benefits, and increasing public awareness about climate change.

KEY INDUSTRY PLAYERS

"Key Players Focus on Partnerships to Gain a Competitive Advantage "

Prominent market players are making collaborative efforts by partnering with other companies to stay ahead in the competition. Many companies are also investing in new product launches to expand their product portfolio. Mergers and acquisitions are also among the key strategies used by players to expand their product portfolio.

List of Market Players Profiled

• South Pole Group [Switzerland]
• 3Degrees [U.S.]
• EcoAct [France]
• Terrapass [U.S.]
• Green Mountain Energy [U.S.]
• First Climate Markets AG [Germany]
• ClimatePartner GmbH [Germany]
• Aera Group [France]
• Forliance [Belgium]
• Element Markets [U.S.]
• Bluesource [U.S.]
• Allcot Group [Spain]
• Swiss Climate [Switzerland]
• Schneider [France]
• NatureOffice GmbH [Germany]
• Planetly [Germany]
• GreenTrees [U.S.]
• Bischoff & Ditze Energy GmbH [Germany]
• NativeEnergy [U.S.]
• Carbon Credit Capital [U.S.]
• UPM Umwelt-Projekt-Management GmbH [Germany]
• CBEEX [China]
• Bioassets [Thailand]
• Biofílica [Chile]

REPORT COVERAGE

This research profiles a report with extensive studies that take into description of the firms that exist in the market affecting the forecasting period. With detailed studies done, it also offers a comprehensive analysis by inspecting the factors like segmentation, opportunities, industrial developments, trends, growth, size, share, restraints, etc. This analysis is subject to alteration if the key players and probable analysis of market dynamics changes.