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Report: Growing carbon credit market will increase to $4.4 trillion

InsightAce Analytic's latest research reveals that the global carbon credit market size is valued at $402.58 billion in 2022, with an expected rise to $4.4 trillion in 2031. The market is projected to have a significant compound annual growth rate (CAGR) of 30.72% from 2023 to 2031.

report_ growing carbon credit market_tree nursery_visual 1

Carbon offsets are units of carbon dioxide (CO2) removed from the atmosphere through projects or actions that lead to a decrease in the amount of CO2 in the atmosphere. Carbon offset projects include planting trees or energy-efficient cookstoves. This reduction in CO2 leads to the development of a carbon credit. To earn a carbon credit, the project must meet specific criteria and be verified by an independent organisation. A carbon credit is like a certificate that is traded on the carbon market and can be purchased by companies or organisations wishing to offset their carbon emissions.

report_ growing carbon credit market_kenya cookstoves project_visual 2Kenya Cookstoves Project, DGB.

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Cap-and-trade regulations in some countries, such as the European Union and California, require companies to reduce their carbon impact. These regulations allow companies to buy and sell carbon credits on a market. This system allows companies to find the most cost-effective way to reduce their emissions, stimulating technological innovation and economic growth.

The report also indicates that international organisations are investing in the carbon credit market to support scalable climate and environmental measures. For instance, the World Bank established the Climate Change Fund Management Unit in 2019 to develop new financial instruments for climate-resilient development, low-carbon, and scale-up climate action.

The report highlights drivers and challenges in the market. The pressing need to keep global temperatures below 2°C is driving stricter emission limitations and reduced supply permits, which will promote carbon credit prices in the future years. Moreover, the market's rapid expansion is likely to attract funding from venture capitalists, banks, and other financial institutions.

However, reducing emissions with today's technologies can be expensive for some businesses, although costs may fall over time. To achieve the global net-zero target, companies must reduce their own emissions as much as possible.

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The report finds that the Asia Pacific carbon credit market is expected to register a significant market share and rise at a high CAGR in the near future. The region is predicted to develop rapidly, and the formation of a new and regulated carbon credit market allows countries like India to experiment with it while the concept is still in its infancy globally. The report highlights that this creates tremendous opportunities for organisations involved in creating knowledge and providing consulting services to global clients to learn and assist in creating and implementing such carbon markets globally. These markets could even be decentralised to meet the specific needs of diverse economies.

Read more: New study: carbon credit market expected to go through the roof

In conclusion, the report findings indicate a growing carbon credit market with a promising future ahead. Partnerships, collaborations, and joint ventures are helping market players boost their businesses. Leading project developers in the field focus on offering high-quality and personalised services to businesses looking to achieve their net-zero targets.

Read more: Net zero and a circular economy: Top 3 opportunities and challenges

DGB Group is committed to designing and implementing nature-based solutions that ignite positive, long-term change. DGB is further committed to assisting businesses in meeting their sustainability targets by providing them with high-quality carbon credits. Our large-scale projects produce carbon credits that are ideal for offsetting unabatable emissions. We collaborate with multiple stakeholders to ensure that our projects have a positive impact on the environment and local communities.

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