Carbon Credit Market to Soar: From $267.8 Billion to $1.2 Trillion by 2029

Despite the scandal involving Shell and 5.7 million tons of fraudulent carbon credits earlier this year, efforts from the carbon credit industry continue to show results, with the latest BCC research study showing an expected growth from $267.8 billion in 2023 to $1.2 trillion by 2029 at a compound annual growth rate (CAGR) of 28.4%. By volume, the market is expected to hit 28 gigatons by growing at a CAGR of 23.1%. Even in India, the BEE (Bureau Of Energy efficiency), tasked with establishing ground rules has released its draft guidelines for feedback.

According to the BCC research report, Europe leads the carbon credit market, thanks to the EU ETS system launched in 2017. Adopted by mainly European industries which prefer high-quality carbon credits, the system allows for the trading and selling of carbon credits. The ETS system and carbon taxes generated a combined $104 billion in revenue, with a 70/30 split in revenue. More and more carbon exchanges are being set up across the world, helping deepen the market and spread the concept. The next step would obviously be wider acceptability, interoperability and of course, unimpeachable quality of appraisals.

Despite decreasing in popularity, voluntary carbon credits continue to remain a key driver in the growth of the global carbon credit industry. This is mainly due to the positive PR that they generate, showing that the company purchasing the credits is going above and beyond. High quality carbon credits have opened up the door for climate investing, allowing companies to invest in renewable technologies and other carbon-offsetting technologies without having to worry about being associated with greenwashed cheap offsets that give the appearance of carbon neutrality without truly achieving it.

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China, the US and India remain the top 3 emitters of carbon, with China being in the lead when it comes to investing in renewable energy. In China, 47.4GW of coal power capacity came online in 2023 while India added 4 gigawatts of coal-fired power capacity in 2023. America’s coal consumption continues to drop.

Regulatory pressure to drop carbon emissions continue to work, with company and individual carbon emissions seeing small dips year on year. Regulations include setting emission limits, taxing carbon emissions and offering incentives for using cleaner technologies.

Some of the key market players are 3Degrees, ClimateTrade, Cool Effect Inc, WGL Holdings INC. and Finite Carbon Corp.

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By Yash Singh