Carbon Offset Market: A Key Pathway to Net-Zero Emissions

The carbon offset market offers an opportunity to achieve global greenhouse emission reductions while addressing the development needs of developing countries. Involving developing nations in climate protection allows them to achieve carbon emission reduction and avoidance while earning revenues from selling their offsets.

Since the need to curb global warming has significantly increased, carbon offsetting has become fundamental to achieving net-zero greenhouse-gas emissions.

The global carbon offset market (carbon offset/carbon credit) is projected to grow from USD 414.8 billion in 2023 to USD 1,602.7 billion by 2028, at a compound annual growth rate (CAGR) of around 31.0%. Factors such as rising awareness for reducing carbon emissions and the urge of companies to reach their net zero targets is expected to fuel the carbon offset market.

The carbon offset market is driven by increasing global warming, stronger regulatory frameworks, net-zero commitments by corporations, and rising demand for carbon removal/sequestration.

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The energy companies have accelerated their participation in reducing carbon emissions, which is helping the carbon markets grow by reducing carbon footprints and creating demand for carbon offset. Carbon offset fund renewable energy projects and help lower the carbon intensity of the energy supply and the energy conservation projects that seek to reduce the overall energy demand.

Avoidance offset are generated from activities that reduce emissions by preventing their release into the atmosphere. Carbon avoidance via direct carbon reduction measures directly reduce carbon footprint. Carbon avoidance via carbon offsets and direct carbon reduction measures improves air quality, protects ecosystems, and aids in climate change mitigation. The effectiveness of carbon avoidance depends on the type of project and reliability to execute. Carbon avoidance via direct carbon reduction measures is effective because it cuts emissions at their source.

Key Players in the Carbon Offset Market

The global carbon offset market is dominated by a few major players that have a wide regional presence. Some of the prominent companies include:

• South Pole Group (Switzerland)
• 3Degrees (US)
• Finite Carbon (US)
• EKI Energy Services Ltd. (India)
• NativeEnergy (US)

The carbon offset market growth in Europe can be attributed to the rising focus on decarbonization with the increased investments in green technologies in the region. Also, pledges such as carbon-free-world in countries such as Norway, Iceland, Ireland, Switzerland, Sweden, and Denmark act as a driving force for the European carbon offset market.