Carbon Credit Market to Grow at CAGR of 16.02% through 2029F

Rising global awareness of climate change and expansion of the voluntary carbon market is expected to drive the Global Carbon Credit Market growth in the forecast period, 2025-2029.

According to TechSci Research report, “Carbon Credit Market – Global Industry Size, Share, Trends, Competition Forecast & Opportunities, 2019-2029F”, the Global Carbon Credit Market stood at USD 6.34 Billion in 2023 and is expected to reach USD 15.33 Billion by 2029 with a CAGR of 16.02% during the forecast period.

The rising global awareness of climate change and its far-reaching impacts is a fundamental driver of the Global Carbon Credit Market. With the growing scientific consensus on the severity of climate change, the public, governments, and businesses are increasingly recognizing the urgent need to reduce greenhouse gas emissions. This heightened awareness is translating into a stronger demand for carbon credits as a mechanism to offset emissions and mitigate climate-related risks.

Public pressure on companies to adopt more sustainable practices has led to increased participation in voluntary carbon markets. Consumers are becoming more conscious of the environmental impact of the products and services they consume, and this shift in consumer behavior is prompting companies to invest in carbon offsets. By purchasing carbon credits, companies can reduce their overall carbon footprint and appeal to environmentally conscious customers, thereby strengthening their brand image and competitive positioning in a marketplace that increasingly values sustainability.

Global climate movements, such as Fridays for Future and Extinction Rebellion, have also played a significant role in raising awareness and bringing climate change to the forefront of public discourse. These movements have mobilized millions of people worldwide and influenced policy decisions, corporate strategies, and the broader public’s perception of climate action. As a result, governments are responding with stricter environmental regulations, while businesses are under pressure to implement sustainability initiatives that include carbon offsetting as part of their broader Environmental, Social, and Governance (ESG) strategies.

The media's extensive coverage of extreme weather events, such as wildfires, floods, and hurricanes, and their connection to climate change has further heightened global awareness and a sense of urgency. These events have made the effects of climate change more tangible to the public, prompting greater demand for solutions that can address the problem at scale.

The alignment of corporate and public interests in tackling climate change is expected to sustain the growth of the carbon credit market. As businesses and individuals seek to minimize their environmental impact, carbon credits are increasingly being seen as a key tool for achieving emission reduction goals. This growing societal demand for climate action, supported by both regulatory frameworks and voluntary initiatives, will continue to drive the expansion of the Global Carbon Credit Market in the years to come. 

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The Global Carbon Credit Market is segmented into application, project type, regional distribution and company

Based on project type, Over the forecast period, Agriculture is anticipated to witness significant growth in the Global Carbon Credit Market. This projected growth stems from the sector’s evolving practices and its potential to offer scalable and impactful carbon mitigation solutions. Agricultural projects are increasingly recognized for their ability to reduce greenhouse gas emissions through innovative practices such as no-till farming, cover cropping, and improved livestock management. These practices not only sequester carbon in soils but also enhance soil health and productivity. The adoption of climate-smart agricultural techniques can lead to substantial reductions in methane and nitrous oxide emissions, which are potent greenhouse gases. Agriculture has the advantage of being adaptable to various regional contexts, allowing for localized implementation and benefits.

The anticipated growth in agricultural carbon credits is also driven by increasing support from both governments and private sector players. Policymakers are increasingly incorporating agricultural emission reductions into climate strategies, providing incentives and subsidies to promote sustainable practices. Similarly, businesses seeking to offset their carbon footprint are looking towards agricultural credits as a means to achieve their sustainability goals while supporting food security and rural development. Advancements in technology, such as precision agriculture and satellite monitoring, are enhancing the ability to measure and verify carbon sequestration in agricultural systems. This improved accuracy and transparency increase the attractiveness of agricultural projects for carbon credit buyers.

Based on region, North America emerged as the second dominant region in the Global Carbon Credit Market in 2023. This prominence is driven by a combination of robust regulatory frameworks, significant corporate participation, and growing public and private sector investments in carbon reduction initiatives. In North America, the United States and Canada have been key contributors to the market’s growth. The United States, with its state-level cap-and-trade programs like California's Cap-and-Trade Program and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast, has created substantial carbon credit markets that facilitate emissions trading and carbon offset projects. These state-level programs offer flexibility and innovation in emissions reduction strategies, which have attracted considerable investment and participation from various industries.

Similarly, Canada’s federal carbon pricing framework, combined with provincial initiatives such as British Columbia’s Carbon Tax and Quebec’s carbon market, has provided a strong regulatory environment that supports carbon credit transactions. The Canadian government’s commitment to reducing greenhouse gas emissions and promoting carbon offset projects has bolstered the growth of the carbon credit market. 

Major companies operating in Global Carbon Credit Market are:

• Indigo Ag Inc
• Climetrek
• Carbon Credit Capital, LLC
• Terra Global Capital, LLC
• South Pole
• Cargill, Incorporated.
• Yara International ASA
• EcoSoul Partners
• Bayer AG
• 3Degrees

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“International climate agreements and global initiatives are crucial drivers of the Global Carbon Credit Market. The Paris Agreement, which aims to limit global warming to well below 2°C, has been a key catalyst for the development of carbon markets. Under the agreement, countries are required to submit Nationally Determined Contributions (NDCs), which outline their plans to reduce greenhouse gas emissions. Carbon credits play a vital role in helping countries meet their NDC targets by allowing them to trade emission reductions across borders. The establishment of Article 6 of the Paris Agreement, which provides a framework for international carbon trading, has further accelerated the growth of the market. In addition to the Paris Agreement, other global initiatives, such as the United Nations' Sustainable Development Goals (SDGs) and the Climate Action 100+ initiative, are driving demand for carbon credits. These initiatives emphasize the importance of reducing emissions and promoting sustainable practices, creating a favorable environment for the carbon credit market to thrive. The increasing collaboration between governments, businesses, and non-governmental organizations (NGOs) on climate action is expected to strengthen the market”, said Mr. Karan Chechi, Research Director of TechSci Research, a research-based management consulting firm.

“Carbon Credit Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Application (Removal Project, Avoidance Project, Combination Project), By Project Type (Forestry and Land Use, Agriculture), By Region and Competition, 2019-2029F”, has evaluated the future growth potential of Global Carbon Credit Market and provides statistics & information on market size, structure and future market growth. The report intends to provide cutting-edge market intelligence and help decision makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in Global Carbon Credit Market.

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