Allied Market Research, a leading market research firm, has recently unveiled its latest report titled Carbon Credits Market by Type, System, End-use Industry: Global Opportunity Analysis and Industry Forecast, 2023-2032. The report highlights the potential growth of the global carbon credits market, which is projected to reach a staggering $143.5 billion by 2032, with a remarkable compound annual growth rate (CAGR) of 55.5% during the forecast period.
Woman providing tree planting exercise at Iruri Primary school in Hombe Location in Kenya.
Carbon credits offer numerous advantages, such as biodiversity preservation and pollution reduction, leading to an increasing demand for these credits. However, rising prices may hinder market growth. On the other hand, the adoption of renewable energy projects presents growth opportunities in the coming decade.
The COVID-19 pandemic had a detrimental impact on the carbon credits market. Travel restrictions and lockdown measures led to the temporary closure of manufacturing industries, resulting in reduced demand. However, as governments, private organisations, and individuals increasingly recognise the importance of carbon credits, the market is recovering and showing great potential.
Read more: Record-breaking Nairobi auction: Saudi Arabian firms vie for 2 million carbon credits
The report indicates that, among the different types of carbon credits, the regulatory segment is projected to dominate the market. Regulatory credits provide verified emission reduction norms, ensuring measurable and real carbon emission reductions. This advantage is expected to drive the growth of the regulatory sub-segment.
The cap-and-trade system is anticipated to be one of the most profitable segments by 2032. Its adaptable mechanisms in accounting for emission-reduction costs make it a popular choice among governments and private institutions.
Within the end-use industry, the industrial sector demonstrates immense potential, with a predicted CAGR of 56.5% by 2032. Industries such as oil and gas, manufacturing, and steel processing contribute significantly to greenhouse gas emissions. As a result, there is a substantial demand for carbon credits in these sectors.
The Asia-Pacific region leads the global carbon credits market, accounting for the highest share in 2022. With its focus on sustainability initiatives, this region is expected to exhibit tremendous growth, projecting a CAGR of 56.5% during the forecast period.
Read more: Deforestation in Asia: a call for conservation
As the world increasingly acknowledges the importance of environmental preservation, the carbon credits market holds immense potential for growth and sustainability in the years to come. Carbon markets play a pivotal role in our efforts to achieve climate goals. They are a compelling incentive for businesses to reduce carbon emissions and embrace sustainable practices.
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