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Impact Analysis of Covid-19

The complete version of the Report will include the impact of the COVID-19, and anticipated change on the future outlook of the industry, by taking into the account the political, economic, social, and technological parameters.

A carbon credit is a tradable permit or certificate that provides the holder of the credit the right to emit one ton of carbon dioxide or an equivalent of another greenhouse gas – it is essentially an offset for producers of such gases. The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming. Carbon credit is a mechanism for the minimization of greenhouse gas emissions. Governments or regulatory authorities set the caps on greenhouse gas emissions. For some companies, immediate reduction of emissions is not economically viable. Therefore, they can purchase carbon credits to comply with the emission cap. A carbon offset that is exchanged in the over-the-counter or voluntary market for credits is referred as Voluntary Emissions Reduction (VER). Whereas, emission units (or credits) created through a regulatory framework with the purpose of offsetting a project’s emissions is called as Certified Emissions Reduction (CER). The main difference between the two is that there is a third party certifying body that regulates the CER as opposed to the VER.

An international carbon credit is being adopted by various countries and state government bodies, which is a major trend in the global carbon credit market. The Kyoto mechanism is vastly adopted by the European Union, for which the European Union launched European Union Emission Trading Scheme (EU ETS) in 2015. Through this, EU employs a basic cap and trade model for EU companies and countries. However, the government of the U.S. did not sign the Kyoto Protocol, thus there is no cap limit for carbon emissions in the country. Nevertheless, many companies and state government bodies are adopting voluntary commitment to reduce carbon emissions. For instance, in 2013, California's Cap-and-Trade Program, an initiative took by the state of California, started its own cap-and-trade program. The rule is applicable to electric power plants, industrial plants, and fuel distributors. In conclusion, the adoption of carbon credit by the local government bodies and companies is a major trend in the global carbon credit market.

In order to reduce the overall carbon emissions, companies have to adopt new advanced technologies for their manufacturing processes, which is costly. According to Coherent Market Insights’ analysis, it is found that many companies find it cheaper to purchase extra carbon credits rather than changing the whole manufacturing process.

Furthermore, the lack of global standardization in the carbon credit market is major factor that may hamper growth of the global carbon credit market during the forecast period. As the carbon credit market is a free market, the companies or an individual can purchase carbon credit from the open market. However, emerging economies such as India and China, which are contributing the highest amount of carbon emissions, are relaxed from the Paris agreement. Thus, they can sell large amounts of carbon credits to developed countries such as European companies. Therefore, irregularities present in the carbon emission law across the globe is a major restraining factor affecting the global carbon credit market growth.

Global Carbon Credit Market - Impact of Coronavirus (Covid-19) Pandemic

Globally, most of the countries are affected by COVID-19 and most of the countries have announced lockdown. Pollution and GHG emissions have fallen across the continents as countries imposed lockdowns and restrictions to contain the spread of the Covid-19. The COVID-19 has brought about short-term environmental benefits as temporary reduction in carbon dioxide and other greenhouse gases, as people were forced to stay at home and industries such as mining, construction, and textiles remained closed for a period. According to the OECD (The Organization for Economic Co-operation and Development) Organization, in China, carbon emission reduced by 25% which is equivalent to around 200m tons of CO2 (MtCO2) in month of February 2020, compared with the same month in 2019. Also, the pandemic has interrupted global supply chains, including those for renewable energy projects, which could delay or obstruct their completion. The carbon offset registries are also considering Covid-19’s impact on reporting period deadlines. If there are hold ups, such a delayed site visits, it may be difficult to finish verification within given reporting timeframe. The Climate Action Reserve is allowing programmatic deadlines to extend by 6 months – if the extension reason is directly Covid-19 related.

Europe held dominant position in the global carbon credit market in 2019

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Carbon Credit Market Report Coverage

Report Coverage Details
Base Year: 2019 Market Size in 2019: US$ 211.5 Bn
Historical Data for: 2017 to 2019 Forecast Period: 2020 to 2027
Forecast Period 2020 to 2027 CAGR: 30.7% 2027 Value Projection: US$ 2,407.8 Bn
Geographies covered:
  • North America: U.S. and Canada
  • Latin America: Brazil, Argentina, Mexico, and Rest of Latin America
  • Europe: Germany, U.K., France, Italy, Russia, and Rest of Europe
  • Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, and Rest of Asia Pacific
  • Middle East and Africa: GCC Countries, South Africa, and Rest of Middle East and Africa
Segments covered:
  • By Sector: Energy, Transportation, Residential and Commercial Buildings, Industry, Agriculture, Forestry, and Water and Wastewater
Companies covered:

WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., ClearSky Climate Solutions, Sustainable Travel International, 3 Degrees, terrapass, and Sterling Planet, Inc.

Growth Drivers:
  • Increasing Global Warming Across The Globe
  • Increasing Investment In The Carbon Credit Market
Restraints & Challenges:
  • Law Irregularities

Statistics:

Europe held dominant position in the global carbon credit market in 2019, accounting for 51.2% share in terms of value, followed by North America and Asia Pacific.

Figure 1: Global Carbon Credit Market Share (%), By Region, 2019

Carbon Credit  | Coherent Market Insights

Europe is expected to account for the largest market share during the forecast period. The developed countries in Europe such as the U.K, Germany, and other European countries are considered prominent buyers in the global carbon credit market. In order to become climate-neutral EU by 2050, the European Union launched EU Emissions Trading System (EU ETS) in 2005, an international emissions trading system. The EU Emissions Trading System (EU ETS) initiative is divided into four timely phased manner in which carbon emission is reduced in order to reduce greenhouse gas effects by at least 40% by 2030 compared to 1990 (as per Paris agreement, initiated in December 2015).

Asia Pacific is expected to exhibit significant growth during the forecast period. India is becoming one of the emerging players for global carbon credit market. As India's greenhouse gas (GHG) emission is below the carbon cap limit, Indian companies are entitled to sell surplus credits to developed countries.

Energy segment is expected to drive the market growth during the forecast period

Among sector, the energy segment is expected to hold dominant position in the global carbon credit market during the forecast period. For instance, according to Coherent Market Insights’ analysis, energy segment accounted for around 53.3 billion across the globe in 2019. Solar or Wind power is used to inject power to the grid, this can replace the power generated from the conventional energy sources thereby reducing the carbon dioxide emissions. Such projects can earn carbon credits in the form of Clean Development Mechanism (CDM) projects.

Figure 2: Global Carbon Credit Market Value (US$ Bn) Analysis and Forecast, 2017 - 2027

Carbon Credit  | Coherent Market Insights

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 WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., ClearSky Climate Solutions, Sustainable Travel International, 3 Degrees, terrapass, and Sterling Planet, Inc.

Carbon credits provide business with a verified method to balance unavoidable carbon footprint by directly supporting projects that are proven to reduce carbon emissions. One Carbon Offset/Credit represents the reduction of greenhouse gases equal to one metric ton of carbon dioxide equivalent (CO2e). The United Nations' Intergovernmental Panel on Climate Change (IPCC) developed a carbon credit proposal to reduce worldwide carbon emissions in a 1997 agreement known as the Kyoto Protocol. The Kyoto Protocol was signed in Kyoto, Japan, in 1997 by 192 industrialized countries. Countries that ratify the Kyoto Protocol are assigned a maximum limit of CO2 emission levels. Emitting more than the assigned limit will result in a penalty for the violating country in the form of lower emissions limit for the following period. However, if a country wants to emit more greenhouse gases than its allowed limit (without penalty), then it may participate in carbon trading using an Emissions Reduction Purchase Agreement (ERPA).

The global carbon credit market is divided into two types, suppliers market and buyers’ market. The emerging economies such as China, India, and others (with relaxed rules for carbon emission as per Paris agreement in 2015) are considered as global suppliers for carbon credit market. India is becoming one of the emerging players for global carbon credit market, however, lack of awareness about carbon credit market among the Indian companies is expected to hamper the Indian carbon credit market growth. As India's GHG emission is below the carbon cap limit, Indian companies are entitled to sell surplus credits to developed countries.

Market Dynamics

The global carbon credit market is expected to grow significantly during the forecast period, owing to the increasing investment in the carbon credit market. At present, the carbon credit market is only limited to companies that are dealing with carbon emissions and its regulations. However, the rapidly growing global carbon credit market is expected to attract funding from various financial institutions such as venture capitals, banks, and others. On the other hand, international non-profit organizations are also investing in the carbon credit market in order to fund and promote scalable climate and environmental actions. For instance, in 2019, The World Bank, an international financial institution, initiated the Climate Change Fund Management Unit, which is responsible for developing new financial instruments for climate-resilient development, and low-carbon and scale-up climate action with the help of private-sector capital. The World Bank is investing around US$ 5 billion in capital for this initiative.

Among sector, forestry segment is expected to exhibit the highest growth during the forecast period. Forests play a vital role in combating climate change. Tropical forests cover about 15 percent of the world’s land surface and contain about 25 percent of the carbon on the planet’s surface. The loss and degradation of forests accounts for 15 - 20 percent of global carbon emissions. The majority of these emissions are the result of deforestation in the tropics, largely due to conversion of the forest to more lucrative economic activities such as agriculture and mining. The market for forest carbon credits has been significantly growing over the past ten years. Currently, there are three different project types that are eligible to produce carbon offsets; afforestation or reforestation, avoided conversion, and improved forest management (IFM). Improved forest management projects are the most common compliance offsets traded in California’s cap and trade program.

Key features of the study:

  • This report provides in-depth analysis of global carbon credit market size (US$ Billion) and compound annual growth rate (CAGR %) for the forecast period (2020– 2027), considering 2019 as the base year
  • It elucidates potential revenue opportunities across different segments and explains attractive investment proposition matrices for this market
  • This study also provides key insights about market drivers, restraints, opportunities, new product launches or approvals, regional outlook, and competitive strategies adopted by the leading  market players
  • It profiles leading players in the global carbon credit market based on the following parameters – company overview, financial performance, product portfolio, geographical presence, market capital, key developments, strategies, and future plans
  • Companies covered as a part of this study include WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., ClearSky Climate Solutions, Sustainable Travel International, 3 Degrees, terrapass, and Sterling Planet, Inc.
  • Insights from this report would allow marketers and management authorities of companies to make informed decisions regarding future product launches, product upgrades, market expansion, and marketing tactics
  • The global carbon credit market report caters to various stakeholders in this industry including investors, suppliers, managed service providers, third-party service providers, distributors, new entrants, and value-added resellers
  • Stakeholders would have ease in decision-making through various strategy matrices used in analyzing the global carbon credit market

Detailed Segmentation

  • Global Carbon Credit Market, By Sector:
    • Energy
    • Transportation
    • Residential and Commercial Buildings
    • Industry
    • Agriculture
    • Forestry
    • Water and Wastewater
  • Global Carbon Credit Market, By Region:
    • North America
      • By Sector:
        • Energy
        • Transportation
        • Residential and Commercial Buildings
        • Industry
        • Agriculture
        • Forestry
        • Water and Wastewater
      • By Country:
        • U.S.
        • Canada
    • Asia Pacific
      • By Sector:
        • Energy
        • Transportation
        • Residential and Commercial Buildings
        • Industry
        • Agriculture
        • Forestry
        • Water and Wastewater
      • By Country:
        • China
        • India
        • Japan
        • Australia
        • South Korea
        • ASEAN
        • Rest of Asia Pacific
    • Europe
      • By Sector:
        • Energy
        • Transportation
        • Residential and Commercial Buildings
        • Industry
        • Agriculture
        • Forestry
        • Water and Wastewater
      • By Country:
        • Germany
        • Italy
        • U.K.
        • France
        • Russia
        • Rest of Europe
    • Latin America
      • By Sector:
        • Energy
        • Transportation
        • Residential and Commercial Buildings
        • Industry
        • Agriculture
        • Forestry
        • Water and Wastewater
      • By Country:
        • Brazil
        • Mexico
        • Argentina
        • Rest of Latin America
    • Middle East and Africa
      • By Sector:
        • Energy
        • Transportation
        • Residential and Commercial Buildings
        • Industry
        • Agriculture
        • Forestry
        • Water and Wastewater
      • By Country/Region:
        • GCC Countries
        • South Africa
        • Rest of Middle East and Africa
  • Company Profiles
    • WGL Holdings, Inc.*
      • Company Overview
      • Product Portfolio
      • Financial Performance
      • Key Strategies
      • Recent Developments/ Updates
    • Enking International
    • Green Mountain Energy
    • Native Energy
    • Cool Effect
    • ClearSky Climate Solutions
    • Sustainable Travel International
    • 3 Degrees
    • terrapass
    • Sterling Planet, Inc.

 “*” marked represents similar segmentation in other categories in the respective section.

Table of Contents

  1. Research Objectives and Assumptions
    • Research Objectives
    • Assumptions
    • Abbreviations
  2. Market Purview
    • Report Description
      • Market Definition and Scope
    • Executive Summary
      • Market Snippet, By Sector
      • Market Snippet, By Region
    • Coherent Opportunity Map (COM)
  3. Market Dynamics, Regulations, and Trends Analysis
    • Market Dynamics
      • Drivers
      • Restraints
      • Market Opportunities
    • Regulatory Scenario
    • Industry Trend
    • Merger and Acquisitions
    • Procedure Of Carbon Credit Trading
    • Carbon Credit (Offset) Purchased By Companies
    • Carbon Offsetting Process
    • Global Greenhouse Gas Emissions Overview
    • Per Capita Carbon Emissions Data By Country (2019)
    • Overview Of Initiatives By Country
    • Carbon credit market: Protocols and standards
    • Carbon Crediting Mechanisms
    • Carbon Pricing Overview
    • Impact of COVID-19 Pandemic
  4. Global Carbon Credit Market, By Sector, 2017-2027 (US$ Million)
    • Introduction
      • Market Share Analysis, 2017 and 2027 (%)
      • Segment Trends
    • Energy
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
    • Transportation
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
    • Residential and Commercial Buildings
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
    • Industry
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
    • Agriculture
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
    • Forestry
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
    • Water and Wastewater
      • Introduction
      • Market Size and Forecast, 2017–2027, (US$ Million)
  5. Global Carbon Credit Market, By Region, 2017-2027 (US$ Million)
    • Introduction
      • Market Share Analysis, By Region, 2017 and 2027 (%)
    • North America
      • Regional Trends
      • Market Size and Forecast, By Sector, 2017–2027 (US$ Million)
      • Market Share Analysis, By Country, 2019 and 2027 (%)
        • U.S.
        • Canada
    • Europe
      • Regional Trends
      • Market Size and Forecast, By Sector, 2017–2027 (US$ Million)
      • Market Share Analysis, By Country, 2019 and 2027 (%)
        • U.K.
        • Germany
        • France
        • Russia
        • Rest of Europe
    • Asia Pacific
      • Regional Trends
      • Market Size and Forecast, By Sector, 2017–2027 (US$ Million)
      • Market Share Analysis, By Country, 2019 and 2027 (%)
        • China
        • India
        • Japan
        • ASEAN
        • Australia
        • South Korea
        • Rest of Asia Pacific
    • Latin America
      • Regional Trends
      • Market Size and Forecast, By Sector, 2017–2027 (US$ Million)
      • Market Share Analysis, By Country, 2019 and 2027 (%)
        • Brazil
        • Argentina
        • Mexico
        • Rest of Latin America
    • Middle East and Africa
      • Regional Trends
      • Market Size and Forecast, By Sector, 2017–2027 (US$ Million)
      • Market Share Analysis, By Country/Region, 2019 and 2027 (%)
        • South Africa
        • GCC Countries
        • Rest of the Middle East and Africa
  6. Competitive Landscape
    • Company Profiles
      • WGL Holdings, Inc.
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • Enking International
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • Green Mountain Energy
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • Native Energy
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • Cool Effect, Inc.
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • ClearSky Climate Solutions
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • Sustainable Travel International
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • 3 Degrees
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • terrapass
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
      • Sterling Planet, Inc.
        • Company Overview
        • Product Portfolio
        • Financial Performance
        • Key Strategies
        • Recent Developments/Updates
    • Analyst Views
  7. Section
    • References
    • Research Methodology
    • About us and Sales Contact

*Browse 60 market data tables and 40 figures on "Carbon Credit Market - Global forecast to 2027”.

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Frequently Asked Questions

The market is expected to reach US$ 2,407.8 billion by 2027.
The market is expected to witness a CAGR of 30.7% during the forecast period (2020-2027).
Increasing global warming across the globe is expected to boost the growth of the market
The energy segment held the largest market share among sectors, contributing 25.2% in terms of value in 2019.
Europe region held the largest share in the market in 2019, accounting for 51.2% share in terms of value.
Key players operating in the market include WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., ClearSky Climate Solutions, Sustainable Travel International, 3 Degrees, terrapass, and Sterling Planet, Inc.
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