Carbon Credits Market Size, Share, Growth, and Industry Analysis, By Type (Compliance,Voluntary), By Application (Energy Producers, Industrial Manufacturers, Environmental NGOs, Governments), Regional Insights and Forecast to 2033

Carbon Credits Market Overview

The Carbon Credits Market size was valued at USD 2.01 million in 2024 and is expected to reach USD 3.46 million by 2033, growing at a CAGR of 7.01% from 2025 to 2033.

The global carbon credits market plays a crucial role in the transition toward net-zero emissions, enabling companies and governments to offset greenhouse gas emissions through verified projects. In 2023 alone, more than 200 million metric tons of CO₂ were traded on voluntary and compliance carbon markets combined. Over 90 countries have implemented or are planning carbon credit schemes to reach climate goals under the Paris Agreement. The compliance carbon market, driven by regulated cap-and-trade systems, covers over 16% of total global greenhouse gas emissions, with more than 40 active emissions trading systems worldwide.

The voluntary carbon market is also expanding rapidly, with more than 80 million metric tons of CO₂ offset by companies, NGOs, and individuals in 2023. Over 3,000 certified carbon credit project developers operate globally, delivering credits through reforestation, renewable energy, and methane capture projects. North America and Europe together account for more than 60% of total transactions. The Asia-Pacific region is emerging fast, with China’s national ETS covering over 4 billion metric tons of CO₂ annually. More than 1,000 major corporations have net-zero commitments that rely heavily on voluntary carbon credits to balance unavoidable emissions.

Key Findings

DRIVER: Growing corporate net-zero pledges from over 1,000 large global companies needing credits to offset millions of metric tons of CO₂.

COUNTRY/REGION: Europe remains the largest regulated carbon market, covering over 1 billion metric tons of CO₂ through its Emissions Trading System (ETS).

SEGMENT: Compliance carbon credits dominate, representing more than 65% of total credits traded globally each year.

Carbon Credits Market Trends

The carbon credits market continues to grow as nations and businesses align with the global carbon-neutral target. In 2023, more than 200 million metric tons of CO₂ equivalent were traded, up from under 50 million a decade ago. The EU ETS remains the largest compliance carbon market, covering over 1 billion metric tons of emissions annually across 27 member states. In North America, California’s cap-and-trade program regulates over 400 million metric tons of CO₂, involving more than 450 power plants and industrial facilities.

On the voluntary side, over 80 million metric tons of CO₂ were retired in 2023 as corporations and NGOs invested in carbon offset projects. Renewable energy and reforestation remain the top project types, accounting for more than 60% of all verified credits. The market has seen a sharp rise in nature-based solutions, with more than 500 large reforestation projects delivering carbon removals in developing countries. Demand for credits from soil carbon, blue carbon (mangroves), and direct air capture projects is also increasing, with over 50 new direct capture projects planned through 2025.

Digitalization is transforming credit tracking and verification. Over 30% of voluntary credits now use blockchain-based registries for transparent issuance and trading. More than 100 new digital platforms launched globally in the past two years to connect buyers with verified credits. Corporate buyers are increasingly purchasing credits bundled with co-benefits, such as biodiversity protection or community development. Over 1,000 companies use third-party certification standards like Verra or Gold Standard to verify carbon offset claims.

Market integration is also trending. More than 20 countries are linking their domestic compliance markets to trade allowances more efficiently. The Western Climate Initiative (WCI) connects California’s market with Quebec’s, covering over 500 million metric tons jointly. Asia-Pacific markets are ramping up; China’s national ETS alone covers over 4 billion metric tons of emissions annually, with over 2,200 power plants under compliance obligations. Overall, the carbon credits market is becoming a key financial mechanism to achieve climate targets while funding projects that remove or avoid millions of metric tons of CO₂ each year.

Carbon Credits Market Dynamics

Carbon Credits Market Dynamics describes the main factors that influence how the carbon credits market grows, adapts, and operates worldwide. It includes drivers like the demand from over 1,000 corporate net-zero commitments needing millions of metric tons of verified credits each year. It highlights restraints such as quality concerns and double-counting risks affecting over 500 offset projects globally. It explains opportunities such as emerging technologies like direct air capture and soil carbon projects, which add millions of metric tons of new credits annually. It also addresses challenges like complex international regulations across more than 40 compliance markets and 90+ countries aligning with the Paris Agreement. These dynamics shape how billions of tons of CO₂ are offset worldwide.

DRIVER

Rising corporate net-zero commitments worldwide.

One major driver of carbon credits market growth is the surge in corporate climate pledges. Over 1,000 global companies, including large industrial manufacturers, energy producers, and financial institutions, have set net-zero targets by 2050 or earlier. Together, these firms emit billions of metric tons of CO₂ annually and rely on carbon credits to offset hard-to-abate emissions. In 2023 alone, corporate buyers retired over 80 million metric tons through voluntary markets, up from under 30 million in 2018. This rising demand drives investment in high-quality offset projects, including reforestation, direct air capture, and carbon farming. Companies are also committing to pay premium prices for verified, additional, and permanent removals to meet investor and consumer expectations for credible net-zero delivery.

RESTRAINT

Concerns over credit quality and double-counting.

A major restraint is the market’s ongoing challenge with credit quality, permanence, and double-counting. In 2023, more than 15% of carbon offsets offered on the voluntary market faced questions about additionality and long-term carbon storage. Over 500 projects have been flagged by NGOs and watchdog groups for overstating impact or not delivering permanent removals. Many developing countries now insist on applying credits only once — either to meet national targets or to sell internationally. More than 30 countries have introduced stricter verification standards or paused international offset approvals to prevent double-counting under the Paris Agreement’s Article 6 framework. This limits supply and complicates cross-border project financing for developers.

OPPORTUNITY

Emerging technologies and nature-based solutions.

One big opportunity is scaling next-generation carbon removal methods. More than 50 direct air capture facilities are planned globally, each targeting removal of over 1 million metric tons annually by 2030. Soil carbon projects and blue carbon credits also show potential; over 1,000 farms have joined pilot programs to sequester carbon in soil, adding more than 5 million metric tons of new credits in the last year alone. Reforestation remains critical too, with more than 500 large-scale tree-planting projects active globally. Corporate buyers are willing to pay premiums for nature-based solutions with verified co-benefits, unlocking millions in new financing for biodiversity and local livelihoods.

CHALLENGE

Complex policy frameworks and shifting regulations.

A key challenge is the patchwork of national and regional rules for carbon trading. Over 40 compliance markets operate under different rules for allowances, offset eligibility, and cross-border transfers. The EU ETS, for example, sets strict limits on credits from outside the EU, impacting developers in Asia, Africa, and Latin America. The US has no federal cap-and-trade system, so companies rely on state-level programs like California’s, which covers over 400 million metric tons but faces legal and political hurdles. The Article 6 mechanism under the Paris Agreement remains complex to implement; more than 90 countries must align national inventories to enable robust international credit transfers. These regulatory uncertainties delay project investment and create price volatility for millions of credits traded each year.

Carbon Credits Market Segmentation

The carbon credits market can be segmented by type and application, helping buyers and sellers match credits to compliance or voluntary climate goals.

By Type

• Compliance: Compliance credits account for over 65% of global carbon credits traded annually. These credits are tied to government-regulated cap-and-trade systems and cover more than 16% of total global emissions. Over 40 countries operate national or regional schemes that issue compliance credits to more than 5,000 industrial and power sector participants. The EU ETS alone covers over 1 billion metric tons, while China’s ETS covers more than 4 billion. Corporations purchase allowances to stay within legally mandated emissions caps, creating steady demand for verified credits and regulated offsets.
• Voluntary: Voluntary carbon credits represent more than 80 million metric tons retired in 2023 alone. Over 3,000 project developers worldwide deliver credits verified by third-party standards. These credits allow companies, NGOs, and individuals to offset residual emissions and fund sustainable development. Renewable energy, reforestation, and methane capture projects make up more than 60% of voluntary credits. The voluntary segment serves more than 1,000 corporate climate programs annually, helping meet Scope 1, 2, and 3 targets through certified carbon removals or reductions.

By Application

• Energy Producers: More than 5,000 power plants globally participate in compliance carbon markets. In the EU and China alone, over 3,000 energy producers surrender allowances covering billions of metric tons of CO₂ each year. Many also invest in voluntary offsets to reduce net emissions.
• Industrial Manufacturers: Over 2,000 large manufacturers rely on compliance markets to manage emissions across cement, steel, and chemical plants. These sectors generate more than 20% of global CO₂ emissions and use both allowances and voluntary credits to meet reduction goals.
• Environmental NGOs: More than 500 NGOs purchase and retire voluntary credits to support climate mitigation and advocate for new carbon removal projects. NGOs help fund more than 1,000 local reforestation and community clean energy projects worldwide.
• Governments: Over 90 countries use carbon markets to meet Paris Agreement pledges, managing compliance credits through cap-and-trade or carbon tax mechanisms. Governments also purchase voluntary credits to balance national inventories or fund climate aid for developing nations.

Regional Outlook for the Carbon Credits Market

Regional Outlook for the Carbon Credits Market explains how the market for carbon credits is structured and traded across major regions. North America accounts for over 50 million metric tons of carbon credits traded yearly, with the U.S. leading through programs like California’s cap-and-trade covering more than 400 million metric tons of CO₂. Europe is the largest compliance market, with the EU ETS regulating over 1 billion metric tons annually across 27 countries. Asia-Pacific is expanding fast, with China’s national ETS alone covering more than 4 billion metric tons each year, plus additional schemes in Japan, South Korea, and Australia. The Middle East & Africa is an emerging region, producing over 10 million metric tons of voluntary offsets yearly through reforestation and renewable projects, with countries like South Africa and the UAE piloting national carbon pricing to reach net-zero goals.

• North America

North America is a major hub for carbon credits, with more than 50 million metric tons traded annually across both compliance and voluntary markets. The United States leads with its regional programs like California’s cap-and-trade system, covering over 400 million metric tons of CO₂ and involving more than 450 regulated companies. Canada’s national carbon pricing covers over 80 million metric tons annually, with provinces like British Columbia and Quebec running linked trading systems through the Western Climate Initiative. More than 500 project developers in North America generate verified credits through forestry, methane capture, and renewable energy projects, helping over 1,000 corporate buyers offset millions of tons of emissions every year.

• Europe

Europe remains the world’s largest regulated carbon credits market, led by the European Union Emissions Trading System (EU ETS). The EU ETS alone covers over 1 billion metric tons of CO₂ emissions across 27 member states, including over 11,000 power plants and industrial sites. The UK operates its own national scheme post-Brexit, covering an additional 150 million metric tons annually. More than 1,000 verified project developers in Europe deliver credits for compliance and voluntary offsetting. The European market sets high standards for additionality and permanence, with over 70% of compliance credits backed by strict verification under EU law.

• Asia-Pacific

Asia-Pacific is an emerging growth engine for carbon credits, with China’s national ETS covering more than 4 billion metric tons of CO₂ each year — the largest single-country carbon market by volume. More than 2,200 power plants and industrial sites participate. Japan and South Korea also run national emissions trading schemes covering more than 500 million metric tons combined. Australia’s voluntary carbon market supports more than 100 large nature-based projects that generated over 20 million metric tons in credits in 2023 alone. Asia-Pacific hosts over 1,000 developers working on renewable energy, forestry, and soil carbon solutions to supply voluntary buyers and link credits to global markets.

• Middle East & Africa

Middle East & Africa is an emerging region for carbon credits, with more than 30 countries exploring carbon pricing or carbon trading schemes. South Africa operates Africa’s largest carbon tax covering over 100 million metric tons annually. The UAE and Saudi Arabia have launched pilot carbon market frameworks targeting net-zero pledges by 2050 or sooner. More than 200 verified carbon projects operate in the region, mainly focused on reforestation and renewable energy. Voluntary credits generated in Africa and the Middle East deliver over 10 million metric tons of offsets each year to corporate buyers in Europe and North America.

List of Top Carbon Credits Companies

• 3Degrees Group, Inc. (USA)
• South Pole Group (Switzerland)
• Carbon Care Asia Ltd. (Hong Kong, China)
• CarbonBetter (USA)
• ClearSky Climate Solutions (USA)
• EKI Energy Services Limited (India)
• Finite Carbon (USA)
• NativeEnergy (USA)
• Torrent Power Limited (India)
• WGL Holdings Inc. (USA)

3Degrees Group, Inc. (USA): 3Degrees has delivered more than 20 million metric tons in verified carbon offsets for North American corporate clients, focusing on renewable energy and nature-based solutions.

South Pole Group (Switzerland): South Pole has developed and sold over 100 million metric tons in carbon credits globally, partnering with more than 1,000 corporate buyers and government programs worldwide.

Investment Analysis and Opportunities

Investment in the carbon credits market continues to expand as corporations and governments pursue aggressive net-zero targets. In 2023, more than $1 billion in private capital was committed to new nature-based projects, including reforestation, mangrove restoration, and regenerative agriculture. Over 500 new reforestation projects were funded globally, targeting over 50 million metric tons of future credits by 2030. Direct air capture and carbon storage attracted more than $500 million in new venture funding, with over 50 commercial-scale facilities planned or under construction to remove over 1 million metric tons annually per plant.

Developers are expanding in emerging regions too. In Asia-Pacific alone, more than 200 new renewable energy and forestry projects were financed in 2023, aiming to supply over 20 million metric tons of verified credits. In Africa, investment flows support more than 100 community-led projects that deliver co-benefits such as biodiversity protection and rural employment alongside carbon sequestration.

Financial institutions are also getting involved. More than 100 banks and asset managers now offer carbon funds or carbon-backed investment products to institutional clients. These funds trade millions of credits on spot and futures markets to generate returns while supporting climate goals. Blockchain startups are attracting capital too, with more than 50 new platforms launched to increase market transparency and traceability for billions of dollars in credits.

New government schemes present additional opportunities. Over 90 countries have outlined policies under the Paris Agreement’s Article 6 framework to trade carbon credits across borders, potentially unlocking millions of metric tons of demand annually. Corporate buyers are ready to commit long-term offtake agreements. In 2023 alone, over 1,000 large companies signed multi-year deals to purchase credits worth tens of millions of metric tons to offset unavoidable emissions and meet climate pledges.

New Product Development

Innovation in the carbon credits market is focused on expanding project types, improving digital traceability, and enhancing credit quality. In 2023–2024, more than 100 new direct air capture projects were announced, each targeting removal of 1–5 million metric tons of CO₂ per year. Soil carbon credits are another new frontier — more than 1,000 farms joined verified carbon farming programs, collectively sequestering over 5 million metric tons of CO₂ in 2023 alone.

Blue carbon projects, which restore coastal wetlands and mangroves, generated over 2 million metric tons of new credits last year, with more than 50 large-scale initiatives under development in Southeast Asia, Africa, and the Caribbean. Biochar projects, which turn agricultural waste into stable carbon storage, added another 1 million metric tons to the market in 2023.

Blockchain-based solutions are transforming transparency. Over 30% of voluntary credits now use blockchain registries to track issuance, sales, and retirement, covering more than 50 million metric tons. New smart contract platforms automate verification and payments for hundreds of developers, speeding up credit delivery to buyers.

Digital marketplaces launched by more than 50 startups connect corporate buyers directly with verified developers, ensuring credits meet strict standards for additionality and permanence. New co-benefit certifications help buyers choose projects that deliver verified biodiversity gains or social impacts. Over 1,000 corporate buyers used these platforms in 2023 to secure millions of credits for their annual net-zero reporting.

Five Recent Developments

• 3Degrees partnered with over 100 new corporate clients to deliver an additional 10 million metric tons of verified offsets through renewable energy and nature-based projects.
• South Pole Group expanded its direct air capture portfolio, securing funding for 5 new plants each targeting over 1 million metric tons of annual removal.
• Finite Carbon launched a blockchain-based forest carbon registry, tracking more than 5 million metric tons of new credits for North American landowners.
• EKI Energy Services announced 50 new soil carbon projects in India and Africa, adding an estimated 2 million metric tons of offsets by 2025.
• CarbonBetter developed a new co-benefit standard for credits, certifying biodiversity protection for over 1 million metric tons of voluntary offsets in 2023.

Report Coverage of Carbon Credits Market

This report provides a comprehensive look at the global carbon credits market, analyzing how more than 200 million metric tons were traded in 2023 across compliance and voluntary systems. It details how compliance credits make up over 65% of total volume, covering more than 16% of global emissions through 40+ regulated systems, from the EU ETS’s 1 billion metric tons to China’s 4 billion.

Voluntary credits remain crucial for net-zero pledges by more than 1,000 corporations, who retired over 80 million metric tons last year alone. More than 3,000 verified project developers deliver offsets through reforestation, renewable energy, and new technologies like direct air capture and biochar.

The report outlines global dynamics, including drivers like corporate net-zero targets for billions of metric tons of emissions, restraints like concerns over double-counting flagged in over 500 projects, and opportunities such as new soil and blue carbon initiatives adding millions of credits each year. Challenges include managing complex policy frameworks across more than 90 countries aligning with the Paris Agreement.

It breaks down the regional outlook — North America’s cap-and-trade systems covering over 400 million metric tons, Europe’s ETS regulating over 1 billion, Asia-Pacific’s 4 billion metric tons under China’s ETS, and Africa’s emerging supply of 10 million metric tons of voluntary credits.

Key players like 3Degrees and South Pole Group lead the market, delivering more than 100 million metric tons each in verified carbon credits. With new technologies, blockchain tracking, and robust standards, the market plays a growing role in channeling billions in funding to projects that remove or avoid millions of metric tons of CO₂ every year.

Frequently Asked Questions