by CDM projects focus on renewable energy installation, energy efficiency, transportation, forestry and other sectors emitting less carbon into the atmosphere. These projects are carried out under the guidance and supervision of UNFCCC in a time-bound manner. The CDM sector helps address climate change concerns while alleviating poverty through transfer of clean technologies and expertise.
The Global Clean Development Mechanism Market is estimated to be valued at US$ 225.43 Bn in 2024 and is expected to exhibit a CAGR of 8.5% over the forecast period 2024 to 2031.
Key Takeaways
Key players: Key players operating in the CDM sector are World Bank, Gold Standard Foundation, Verra, EcoSecurities, SouthSouthNorth, ClimateCare, Carbon Trust, Deloitte, Ernst & Young (EY), KPMG, PwC (PricewaterhouseCoopers), Natural Capital Partners, Sustainable Development Solutions Network (SDSN), and International Emissions Trading Association (IETA). These players offer carbon offsetting solutions, verification and certification services.
Growing demand: Strict emission regulations worldwide and pledge by governments to achieve net-zero emissions by 2050 via the Paris Agreement have increased the demand for carbon offsets and Clean Development Mechanism Market Size projects. Industries are actively exploring ways to reduce carbon footprint via offset projects.
Global expansion: Developing nations in Asia, Africa and Latin America have become major destinations for CDM projects over the years. CDM facilitates global cooperation in climate change mitigation. Countries are cooperating to establish carbon markets for trading offsets.
Market Key Trends
Voluntary carbon markets are witnessing strong growth driven by corporations and individuals actively looking for ways to offset emissions beyond regulatory obligations. Voluntary projects generate a higher return for developers as credits can be sold at a premium. Going forward, linking compliance and voluntary markets is expected to spur liquidity and scale of global carbon trading.
Porter’s Analysis
Threat of new entrants: The steep learning curve and complexity involved in CDM project development poses a barrier for new entrants. However, low entry barriers in developing nations attracts new project developers. Bargaining power of buyers: As an emissions trading scheme, large buyers like EU have significant bargaining power due their requirement of large volume of certified emissions reductions. Bargaining power of suppliers: Individual CDM project developers have less bargaining power against large buyers and brokers due to the fragmented nature of supply. Threat of new substitutes: Joint Implementation and other emissions trading mechanisms pose a threat but CDM remains the leading program for carbon credits from developing nations. Competitive rivalry: Intense competition exists among project developers and brokers for CDM projects and certified emissions reductions.
Geographical regions where market in terms of value is concentrated
Asia accounts for a significant share in terms of value as majority of CDM projects are located in India, China and other Asian nations. These developing countries have a high potential for low-cost greenhouse gas mitigation projects across sectors like renewable energy, energy efficiency, waste management etc.
Fastest growing region for the market
Africa is projected to be the fastest growing region for the Clean Development Mechanism Market Size And Trends between 2024-2031. This is driven by growing carbon credit demand from European Union coupled with substantial untapped potential across African nations for various types of emission reduction projects across sectors like renewable energy, transport, agriculture etc. Efforts are being made to boost institutional capacities and remove barriers to unlock CDM opportunities in Africa.
*Note:
1.Source: Coherent Market Insights, Public sources, Desk research
2.We have leveraged AI tools to mine information and compile it
Ravina Pandya
Ravina Pandya,Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. LinkedIn
