Market Trends
Last updated
Last updated
A significant driver for the growth of the carbon credit market is the increasing demand from the corporate sector. Companies worldwide are purchasing carbon credits in the voluntary carbon market (VCM) to offset their carbon dioxide equivalent (CO2e) emissions. This trend is partly driven by the corporate commitment to reaching net-zero emissions, aligning with global climate goals such as the Paris Agreement. About 33% of the world's largest companies have pledged to reach net-zero between 2030 and 2050, emphasizing the need for carbon removal initiatives to neutralize residual emissions that are hard to eliminate.
Currently, avoidance credits, which are for projects that prevent emissions, make up the majority of the market. However, projections suggest that removal credits, which lower existing emissions, are expected to increase significantly, reaching 35% of the market supply by 2030. This shift indicates a growing emphasis on not just avoiding but actively reducing the existing carbon emissions.
Consumer Influence and Engagement: The rise of eco-conscious consumers is also influencing companies to adopt greener practices. As consumers become more aware of their carbon footprints and the effectiveness of carbon credits, their interest in purchasing credits is growing. A survey showed that 38% of US consumers expressed interest in buying carbon credits soon after understanding their role in climate mitigation.[2] Companies, in turn, are responding to this consumer demand by integrating carbon credit options into their core business models and providing more information and transparency about the carbon credits and the supported projects.
Notably, millennials show a higher willingness to pay for carbon credits, indicating a generational shift towards more sustainable consumer behavior. This trend is evident in various sectors, including apparel and air travel.[2]
The intersection of corporate and consumer action in the form of carbon credits is pivotal for climate change mitigation. With increasing positive sentiment and interest, there is high potential for accelerated adoption of carbon credits. This adoption will be crucial for meeting global climate goals and transitioning to net-zero emissions.[2]
The enterprise market for carbon credits is set to grow significantly, fueled by corporate commitments to sustainability, consumer-driven demand, and a shift in the types of credits being sought. This market evolution is a key component in the global effort to combat climate change and achieve a sustainable future.
