June 17, 2024
Carbon Offset Market

The Carbon Offset Market Is Driven By Increasing Awareness About Climate Change

Carbon offset projects involve afforestation, renewable energy generation and distribution systems that help reduce greenhouse gas emissions from industrial and commercial activity. They allow businesses and organizations to neutralize their carbon footprint by supporting environmentally-friendly initiatives elsewhere as an alternative to directly cutting their own emissions. With greenhouse gas levels continuing to rise due to human activity, there is growing pressure on corporations and governments worldwide to take climate change more seriously and transition to greener operations. The global carbon offset market allows entities to contribute to lowering overall carbon dioxide levels in a flexible manner through investing in projects that remove or reduce an equivalent amount of CO2 from the atmosphere.

The global Carbon Offset Market is estimated to be valued at US$ 414.8 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market key trends:

Demand for carbon offsets is expected to significantly increase over the coming years as more organizations set ambitious carbon reduction targets to achieve net-zero emissions by 2050 in line with the Paris Climate Agreement. While in-house reductions should remain the priority, offsets provide a viable option to offset residual emissions especially from hard-to-abate sectors. Certain countries and regions have also established carbon pricing mechanisms through emissions trading schemes that mandate large industrial players to offset a portion of their annual emissions, thereby creating a steady flow of offset demand. Technology innovations in areas like direct air capture and emissions monitoring are helping address concerns around additionality and verifiability of offset projects.

Porter’s Analysis

Threat of new entrants: The carbon offset market requires significant certifications and processes to enter, limiting new competitors. However, start-ups with innovative technologies may see opportunities.

Bargaining power of buyers: Large buyers seeking carbon offsets have significant bargaining power to negotiate prices lower. However, alternatives are limited given regulatory compliance needs.

Bargaining power of suppliers: A variety of offset project developers and certification bodies exist globally, limiting any single supplier’s power. Buyers can easily switch between offset types and regions.

Threat of new substitutes: No close substitutes currently exist for carbon offsets that allow companies to achieve carbon neutrality commitments or regulatory compliance needs.

Competitive rivalry: Competition is high between offset certification standards and project developer organizations seeking to work with multinational buyers and compliance entities. Innovation in offset types also fuels competition.

Key Takeaways

The Global Carbon Offset Market Size is expected to witness high growth as more companies and governments commit to achieving carbon neutrality by 2050. The global Carbon Offset Market is estimated to be valued at US$ 414.8 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030.

Regions like Europe and North America currently dominate offset usage to meet compliance needs from cap-and-trade programs and carbon taxes. However, volumes are increasing rapidly in Asia due to development of compliance schemes in China, South Korea, and other emerging economies. Europe accounts for the largest share of the carbon offset market currently due to long-running cap-and-trade programs and carbon pricing in the EU. Germany, France, Sweden and other nations have seen offset demand grow steadily. North America follows largely due to regulatory schemes in California and the northeastern US.

Key players: Key players operating in the carbon offset market are AptarGroup, Weener Plastics Group, Bormioli Rocco Pharma, Pacific Packaging Components, PCC Exol, SHL Group, O.Berk Company, Winfield Laboratories, O.Berk, Comar, RPC Group, Alpha Packaging, Pretium Packaging, Silgan Holdings, Origin Pharma Packaging, Vidchem pty ltd, Mold-Rite Plastics, Berry Global, Amcor, Gerresheimer.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it