Carbon Offsetting Market Size, Share, Growth, and Industry Analysis, By Type (Forestry,Renewable Energy,Waste Disposal,Others), By Application (Personal,Enterprise), Regional Insights and Forecast to 2033

Carbon Offsetting Market Overview

The Carbon Offsetting Market size was valued at USD 224.84 million in 2024 and is expected to reach USD 291.5 million by 2033, growing at a CAGR of 3.3% from 2025 to 2033.

The global carbon offsetting market registered approximately USD 1.4 billion in corporate retirements of carbon credits in 2024, representing around 162 million metric tonnes of CO₂ equivalent offset through voluntary mechanisms. Projects spanned over 6 200 certified initiatives, which collectively issued about 305 million tonnes of credits during that year. Nature-based approaches accounted for roughly 91 percent of retirements, while engineered removal projects contributed the remaining 9 percent. The average trading price per voluntary credit fell to around USD 4.80/tCO₂ in 2024—a drop of roughly 20 percent from 2023.

Compliance-based carbon trading systems registered a notional market value of about EUR 881 billion (approx. USD 949 billion) in 2023, with nearly 12.5 billion tonnes exchanged globally. Of these, the EU Emissions Trading System accounted for approximately 87 percent of the value and around 74 percent of trading volumes. Meanwhile, the number of operational emission‑trading schemes reached 75 globally, covering around 24 percent of global greenhouse emissions by early 2024. Carbon removal technologies include around 53 direct air capture (DAC) facilities planned or operational through 2024, adding nearly 36 000 tonnes per year from individual plants. Approximately 162 million credits were retired globally in 2024.

Key Findings

Driver: Corporate net‑zero commitments drove retirement of around 162 million tCO₂ in 2024.

Top Country/Region: Europe dominated global offsetting, accounting for approximately 79 percent of voluntary market share in 2023.

Top Segment: Nature‑based forestry projects made up around 91 percent of retired credits in 2024.

Carbon Offsetting Market Trends

The carbon offsetting market is witnessing significant transformation, with over 305 million carbon credits issued globally in 2024 under voluntary mechanisms. This marks an approximate 11% increase in issuance compared to 2023. Nature-based solutions, such as afforestation, reforestation, and avoided deforestation, dominate with nearly 91% of all retired credits, while technological solutions, including direct air capture (DAC) and biochar, account for the remaining 9%. A sharp decline in the average price of voluntary carbon credits—from USD 6.00 to USD 4.80 per tonne CO₂ between 2023 and 2024—has created affordability but raised concerns about market credibility. This drop is partly attributed to oversupply and increased scrutiny of project integrity. Despite this, leading carbon registries like Verra and Gold Standard have collectively registered over 6,200 certified projects, with a growing shift toward permanence and co-benefits in offset schemes. Compliance carbon markets, such as the EU Emissions Trading System (EU ETS), saw a total of 12.5 billion allowances traded in 2023. The EU ETS alone accounted for 74% of global trading volume, with a value of over EUR 750 billion. China’s national ETS, launched in 2021, is now the largest by emissions coverage, encompassing approximately 4.5 billion tonnes of CO₂ across its energy sector.

Corporate interest continues to grow. As of late 2024, more than 1,800 companies have made science-based targets, many of which include voluntary offsetting as part of their carbon-neutral strategies. The airline industry—particularly via CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation)—remains a significant buyer, alongside tech firms, retail giants, and financial institutions. Digital platforms and tokenized carbon credits have emerged as a key trend, with blockchain-based solutions helping track ownership, transparency, and credit retirement. In 2024, over 22 million credits were issued and tracked via blockchain, marking a 40% increase from 2023. Additionally, national governments are incorporating Article 6 of the Paris Agreement to link voluntary markets with compliance markets. At COP28, 37 countries committed to strengthening carbon credit integrity standards and aligning national registries with the new international guidance. The expansion of co-benefits like biodiversity enhancement, local employment, and water conservation are also driving demand, especially in consumer-driven sectors. With over 54% of new credits in 2024 linked to SDGs (Sustainable Development Goals), offset buyers are increasingly valuing impact beyond carbon metrics.

Carbon Offsetting Market Dynamics

DRIVER

Corporate Net-Zero Commitments and Regulatory Push

The main driver for the carbon offsetting market is the rapid growth in net-zero carbon commitments from corporations and governments. As of 2024, over 10,000 organizations globally have pledged to achieve carbon neutrality by 2050 or sooner. This surge has created a steep demand for high-quality offsets to meet residual emissions. The voluntary carbon market (VCM) has seen more than 162 million credits retired in 2024 alone, representing organizations offsetting equivalent CO₂ emissions they could not reduce internally.

RESTRAINT

Limited Transparency and Quality Assurance

Despite growth, a key restraint is the lack of transparency and inconsistent quality of offsets, which raises credibility issues. Numerous investigations in 2023 and 2024 have revealed that some offset projects, especially in forestry and soil carbon, overstate their carbon sequestration capabilities. Approximately 32% of issued credits in 2023 faced criticism for lack of permanence, additionality, or verification.

OPPORTUNITY

Integration of Article 6 and Blockchain-Based Carbon Markets

A major opportunity lies in the integration of voluntary markets with Article 6 of the Paris Agreement, which allows nations to trade mitigation outcomes. This legal framework encourages cross-border cooperation and gives a sovereign seal of approval to verified carbon credits.

CHALLENGE

Rising Monitoring and Verification Costs

A persistent challenge is the rising cost of monitoring, reporting, and verification (MRV). As scrutiny rises, the average MRV cost per offset project has increased by 27% between 2022 and 2024. Satellite-based tracking, machine learning models, and drone-based measurements are replacing manual inspections, but the high upfront investment limits adoption, especially in developing countries.

Carbon Offsetting Market Segmentation

The carbon offsetting market is segmented by type into forestry, renewable energy, waste disposal, and others, and by application into personal and enterprise use. Forestry-based offsets dominate, accounting for over 60% of market volume due to their natural sequestration potential and lower cost. Renewable energy follows, supported by growing investment in wind and solar offset projects. Waste disposal and other methods, including industrial carbon capture, are niche but growing. In terms of application, enterprises account for over 88% of voluntary offset purchases, primarily to meet ESG targets, while individual buyers comprise a smaller but rising portion, driven by travel and lifestyle emissions.

By Type

• Forestry: offsets lead the market with over 195 million tonnes of CO₂e issued from forestry-related projects in 2024. These include reforestation, afforestation, and REDD+ (Reducing Emissions from Deforestation and Forest Degradation) initiatives. Countries like Brazil and Indonesia dominate this category. The carbon price for high-integrity forestry offsets averaged USD 5.10/tonne in 2024.
• Renewable Energy: offsets contributed approximately 18% of the total market in 2024, with over 55 million tonnes of CO₂e offset through wind, solar, and hydroelectric projects. These offsets are especially prevalent in Asia and Africa, where grid decarbonization is ongoing. The average cost of renewable energy offsets was USD 3.60/tonne.
• Waste Disposal: and methane capture projects make up about 8% of issued credits in 2024, particularly in landfills and agricultural facilities. Methane reductions from landfill gas capture accounted for over 21 million tonnes of CO₂e avoided in 2024.
• Others: types include industrial gas projects and emerging carbon removal technologies. DAC (Direct Air Capture) and biochar projects issued around 5 million tonnes of credits in 2024, commanding premium prices averaging USD 200/tonne due to their permanence.

By Application

• Personal: Individual carbon offsetting is growing, with over 19 million credits purchased by consumers in 2024. Common use cases include flight emissions, driving, and household energy. The average transaction size is 1.4 tonnes CO₂e per buyer per year.
• Enterprise: Corporates dominate the application segment, representing over 88% of all retired credits in 2024. Tech companies, airlines, and financial institutions lead purchases. Average volume per corporate buyer was 26,000 tonnes in 2024, with several exceeding 100,000 tonnes per year.

Carbon Offsetting Market Regional Outlook

The carbon offsetting market demonstrates varying regional growth patterns based on regulatory structure, credit demand, and project implementation scope. Europe leads in voluntary retirements and compliance schemes, while North America sees rapid expansion in direct air capture and blockchain-backed credits. Asia-Pacific shows fast growth in renewable energy offsets, and Africa plays a critical role in nature-based solutions.

• North America

remains a key region, driven by climate commitments and technological innovation. The U.S. voluntary market registered over 48 million retired credits in 2024, primarily through corporate net-zero goals. California's Cap-and-Trade program issued approx. 250 million allowances, contributing to regional leadership. Canada’s offset framework under its OBPS (Output-Based Pricing System) added nearly 5 million tonnes CO₂e in reductions in 2023–2024. Major project types include forestry in the Pacific Northwest and methane capture in Texas and Alberta. Direct air capture is also concentrated in the U.S., with 10 DAC facilities operational by end-2024.

• Europe

leads global carbon trading, with the EU ETS covering over 1.5 billion tonnes CO₂e annually. The EU market accounted for 74% of global carbon trading volume in 2023. Voluntary credits retired by European firms exceeded 82 million tonnes in 2024, with demand rising in finance, manufacturing, and transportation sectors. Countries like Germany, France, and the Netherlands actively source high-integrity forestry credits abroad. The UK ETS, launched post-Brexit, covered around 150 million tonnes CO₂e in 2024, reinforcing regional momentum. European buyers increasingly focus on credits linked to SDGs, co-benefits, and permanence.

• Asia-Pacific

shows rapid expansion in carbon offset project generation, particularly in renewable energy. India and China together host over 700 registered offset projects, generating more than 90 million credits in 2024. China’s national ETS remains the largest by emissions, covering more than 4.5 billion tonnes CO₂e from power plants. Australia’s ERF (Emissions Reduction Fund) issued 14 million Australian Carbon Credit Units (ACCUs) in 2024. Forestry, cookstove, and hydro projects in Southeast Asia drive regional issuance. Voluntary credit demand is rising in Japan and South Korea, supported by domestic climate targets and corporate sustainability.

• Middle East & Africa

plays a pivotal role in nature-based offsets. Over 130 million tonnes CO₂e in offset potential is estimated from forestry and mangrove projects. In 2024, African countries issued approx. 25 million credits, with Kenya, Mozambique, and the DRC among the top hosts. Clean cooking projects are significant, issuing over 6 million credits in 2024. The Middle East is emerging with projects in Saudi Arabia and UAE aligned with net-zero visions. The region saw the launch of a carbon exchange in Abu Dhabi, enabling cross-border trade.

List of Top Carbon Offsetting Companies

• South Pole Group
• 3Degrees
• EcoAct
• Terrapass
• Green Mountain Energy
• First Climate Markets AG
• ClimatePartner GmbH
• Aera Group
• Forliance
• Element Markets
• Bluesource
• Allcot Group
• Swiss Climate
• Schneider
• NatureOffice GmbH
• Planetly
• GreenTrees
• Bischoff & Ditze Energy GmbH
• NativeEnergy
• Carbon Credit Capital
• UPM Umwelt-Projekt-Management GmbH
• CBEEX
• Bioassets
• Biofílica

South Pole Group: Issued and retired over 52 million voluntary credits globally in 2024. Active in 60+ countries, it dominates with diverse forestry, energy, and biodiversity projects.

ClimatePartner GmbH: Facilitated over 28 million tonnes CO₂e worth of offsetting services in 2024, primarily focused on enterprise solutions across Europe and Asia-Pacific.

Investment Analysis and Opportunities

Investment in the carbon offsetting market is growing rapidly, spurred by increasing corporate demand, technological innovation, and government mandates. In 2024, global climate finance allocated to offset-related infrastructure crossed USD 18 billion, with a sharp rise in nature-based and engineered removal solutions. Over USD 2.1 billion was invested into reforestation and forest conservation projects, particularly across Latin America and sub-Saharan Africa. Private equity and venture capital funding in carbon tech surpassed USD 4.5 billion in 2024. This includes support for carbon marketplaces, MRV solutions, satellite surveillance, and blockchain-enabled registries. For instance, Climeworks raised USD 650 million to expand its DAC facility in Iceland, which aims to remove 36,000 tonnes of CO₂ per year. Green bonds are emerging as a financing mechanism, with over 70 offset-linked bonds issued in 2024 across Asia and Europe. These bonds support project developers through upfront capital for afforestation, cookstoves, and renewable energy credits. Institutional investors are participating through climate funds. In 2024, over 30 ESG-focused funds included offset projects in their portfolios. Sovereign wealth funds from Norway and the UAE invested jointly in African carbon credit hubs. Public-private partnerships are rising.

For instance, the LEAF Coalition—supported by governments and corporations—committed over USD 1.5 billion in 2024 to finance tropical forest credits aligned with ART-TREES standard. Over 65 million tonnes of carbon credits are to be delivered through these deals. Emerging opportunities lie in regenerative agriculture, which captured USD 320 million in 2024, generating more than 6 million tonnes of offsets. Biochar, blue carbon, and urban forestry are underexplored but promising domains, with pilot projects in over 25 cities globally. Additionally, credits with biodiversity co-benefits are fetching premiums up to 25–40% higher than generic carbon offsets, attracting nature-positive investors. Demand for removals—particularly long-duration sequestration like DAC—is also increasing, with prices exceeding USD 200/tonne. The market’s evolution is supported by strong demand signals. According to project pipelines, over 1.2 billion tonnes CO₂e in offset projects are under development globally. Investors are capitalizing on early-mover advantage, with multi-national corporations entering long-term offtake agreements.

New Product Development

Innovation is reshaping the carbon offsetting landscape, with new products focused on integrity, traceability, and high-impact removals. In 2024, over 220 new carbon credit projects were registered under Verra, Gold Standard, and ART registries, covering diverse types from agroforestry to DAC. Biochar credits gained popularity, with over 4 million tonnes CO₂e issued globally. These credits, derived from biomass pyrolysis, offer high permanence and co-benefits for soil health. New methodologies for biochar MRV using spectroscopy and blockchain increased traceability and reduced verification time by 30%. Direct air capture (DAC) and enhanced weathering credits are also expanding. Carbon Engineering, in collaboration with Occidental, began construction of a DAC plant in Texas projected to capture 500,000 tonnes CO₂e annually. These credits are among the most expensive, priced at over USD 600/tonne, but are in high demand for hard-to-abate sectors. Blockchain platforms like Toucan, KlimaDAO, and Solid World introduced tokenized carbon assets, with smart contracts enabling real-time trading and automatic retirement. In 2024, 22 million credits were tokenized, a 40% increase from 2023.

Customized offset portfolios are being developed for clients seeking alignment with SDGs. These include water conservation, gender equity, and biodiversity-linked projects. Platforms now offer AI-driven project selection tools, optimizing carbon impact and co-benefit scoring. New ratings agencies such as BeZero Carbon and Sylvera launched API-integrated scores, rating projects on factors like additionality, permanence, and leakage. Over 9,000 projects were rated by end-2024, supporting institutional buyer decisions. In the aviation sector, IATA launched the Aviation Carbon Exchange (ACE), enabling airlines to trade credits aligned with CORSIA. By 2024, over 2.5 million tonnes of aviation-specific offsets were traded on the platform. Digital Monitoring Reporting and Verification (DMRV) systems are enabling real-time impact tracking. Providers like Pachama and UP42 use satellite imaging and AI to assess biomass and deforestation with accuracy within ±5% margin of error. These developments aim to standardize, scale, and secure trust in carbon offsetting, with premium credits commanding up to 4x the average price in voluntary markets. Product innovation will continue to evolve in tandem with regulation and buyer expectations.

Five Recent Developments

• Climeworks raised USD 650 million to build its second DAC plant in Iceland, targeting 36,000 tonnes CO₂ removal per year (2024).
• South Pole Group launched 40 new forestry projects in Latin America and Southeast Asia, totaling 15 million credits (2023–2024).
• Toucan Protocol enabled tokenization of 22 million carbon credits, increasing transparency and liquidity in the voluntary market (2024).
• LEAF Coalition signed deals with Ghana and Vietnam for tropical forest credits totaling 65 million tonnes CO₂e under ART-TREES (2024).
• Verra launched a new Plastic Waste Reduction Standard, expanding into plastic credits alongside carbon (2023).

Report Coverage of Carbon Offsetting Market

The carbon offsetting market report comprehensively analyzes the structural and strategic dimensions of voluntary and compliance-based markets. It covers over 30 countries, six major project types, and five key end-user applications, offering detailed segmentation and volume-based data. The study includes trading volumes, issued credits, retired volumes, credit types, pricing bands, and demand forecasts through 2030. Key coverage areas include voluntary markets governed by registries such as Verra, Gold Standard, and ART, as well as compliance markets including EU ETS, California Cap-and-Trade, China ETS, and South Korea ETS. It includes breakdowns by removal versus avoidance, permanence tiers, and SDG co-benefits. The report tracks market volumes, with 305 million credits issued and 162 million retired in 2024, detailing top buyers and project developers. It includes regional dynamics across North America, Europe, Asia-Pacific, Middle East & Africa, and Latin America, with comparative insights into credit types, issuance rates, and retirement trends. Technological and innovation analysis covers blockchain-based registries, satellite-based MRV, AI-powered ratings, and carbon tokenization. It also assesses the emergence of biochar, DAC, and blue carbon, including credit pricing and offtake agreements. The report further analyzes investment flows, highlighting USD 18 billion+ in capital deployment in 2024 across forestry, removals, tech infrastructure, and climate bonds. Risk assessments cover regulatory uncertainty, MRV costs, project integrity concerns, and price volatility.

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