Carbon Credit Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Application (Removal Project, Avoidance Project, Combination Project), By Project Type (Forestry and Land Use, Agriculture), By Region and Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 7.96 Billion
CAGR (2026-2031)	16.59%
Fastest Growing Segment	Combination Project
Largest Market	Europe
Market Size (2031)	USD 19.99 Billion

Market Overview

The Global Carbon Credit Market will grow from USD 7.96 Billion in 2025 to USD 19.99 Billion by 2031 at a 16.59% CAGR. The Global Carbon Credit Market is defined as a trading mechanism wherein entities purchase tradable certificates representing the removal or avoidance of one metric ton of carbon dioxide equivalent to offset their emissions. The expansion of this sector is primarily propelled by stringent government mandates requiring regulatory compliance and the increasing strategic commitment of private corporations to achieve Net Zero sustainability targets. According to the World Bank, in 2024, global carbon pricing revenues reached a record USD 104 billion, underscoring the substantial financial scale and adoption of these environmental instruments within the broader economy.

A significant challenge impeding market expansion involves the integrity and verification of credit quality. Widespread concerns regarding greenwashing and the absence of unified global standards for measuring additionality create uncertainty that deters institutional investment. This lack of standardized transparency complicates the validation process and frequently results in price volatility, thereby slowing the broader acceptance of carbon credits as a reliable method for climate mitigation.

Key Market Drivers

The acceleration of corporate net-zero and carbon neutrality commitments is fundamentally reshaping demand dynamics within the sector. As major conglomerates integrate sustainability into their core operations to mitigate reputational risk and satisfy investor pressure, the procurement of high-quality offsets has become integral to their transition strategies. According to Net Zero Tracker, September 2024, in the 'Net Zero Stocktake 2024', the number of Forbes Global 2000 companies with net zero targets increased by 23 percent compared to the prior year. This surge in voluntary pledges forces companies to seek verified credits for residual emissions they cannot immediately eliminate, thereby stabilizing demand despite broader economic fluctuations and ensuring a continuous capital flow into decarbonization projects.

Simultaneously, the expansion of government-mandated cap-and-trade systems provides a regulated framework that compels industrial compliance and drives price discovery. These compliance markets are evolving from isolated pilot programs into robust regional mechanisms that cap total emissions and allow the trading of allowances. According to the International Carbon Action Partnership, April 2024, in the 'Emissions Trading Worldwide: 2024 Status Report', there were 36 emissions trading systems in force globally covering approximately 18 percent of global greenhouse gas emissions. The rigidity of these statutory requirements ensures a baseline volume of trading activity that complements the voluntary sector. Highlighting the scale of this trading environment, according to LSEG, in 2024, the value of traded global carbon markets reached a record 881 billion Euros in the preceding year.

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Key Market Challenges

The absence of unified global standards and recurring issues regarding the verification of credit quality present a substantial barrier to the growth of the Global Carbon Credit Market. When buyers face uncertainty about the legitimacy of carbon removal or avoidance claims, they often delay or withdraw investment to avoid reputational risks associated with greenwashing. This absence of consistent validation protocols creates a volatile trading environment where price discovery becomes difficult, thereby discouraging large-scale institutional participation.

Consequently, this lack of confidence directly reduces market liquidity and trading volumes. According to Ecosystem Marketplace, in 2024, the annual value of the voluntary carbon market contracted to USD 723 million for the preceding year, a sharp decline attributed largely to buyer caution regarding project quality and methodology. This reduction in financial turnover illustrates that without transparent and standardized mechanisms to ensure additionality, the market remains vulnerable to skepticism. The inability to guarantee credit quality leads to hesitant buyer behavior, directly stalling the momentum necessary for the sector to mature.

Key Market Trends

The shift toward high-durability carbon removal credits is fundamentally altering product preferences within the market. Buyers are increasingly prioritizing projects that sequester carbon for centuries, such as direct air capture and biochar, to mitigate greenwashing risks and ensure long-term climate impact. This transition is evident in the surging demand for engineered solutions that offer verifiable permanence despite their higher price point. According to CDR.fyi, February 2025, in the '2024 Year in Review', the global purchased volume of high-durability carbon removal credits reached nearly 8 million tonnes in 2024. This growth signifies a move away from low-quality avoidance schemes toward asset classes that provide definitive geological or biological storage.

Simultaneously, the operationalization of Paris Agreement Article 6 trading mechanisms is establishing a robust framework for international compliance trading. This trend enables countries to exchange Internationally Transferred Mitigation Outcomes (ITMOs) to meet their Nationally Determined Contributions, creating a new layer of sovereign demand that complements voluntary corporate purchasing. The rigorous authorization processes required for these trades are setting higher benchmarks for credit integrity and transparency across the broader ecosystem. According to Latham & Watkins, September 2025, in the 'Singapore Signs Further Implementation Agreements' update, the Singaporean government announced contracts for 2.175 million tonnes of Article 6-compliant credits. This government-led procurement underscores the emerging role of bilateral implementation agreements in driving cross-border liquidity.

Segmental Insights

Based on recent market intelligence, the Combination Project segment is identified as the fastest-growing category within the Global Carbon Credit Market. This rapid expansion is driven by the increasing corporate demand for high-integrity credits that integrate emission avoidance with carbon removal, such as agroforestry or improved forest management. These hybrid projects provide a strategic advantage by delivering immediate reduction benefits alongside durable sequestration, addressing the scarcity of pure removal credits. Furthermore, as institutions like the Science Based Targets initiative emphasize the importance of removals for long-term net-zero goals, buyers are prioritizing combination projects to ensure compliance with evolving quality standards.

Regional Insights

Europe maintains the leading position in the global carbon credit market primarily due to the established framework of the European Union Emissions Trading System (EU ETS). This cap-and-trade mechanism creates high demand for allowances by setting mandatory emission limits for key industrial sectors. The region benefits from strict regulatory enforcement and transparent trading policies that encourage consistent corporate participation. Additionally, firm legislative commitments to climate goals drive the continuous expansion of market activity. These structural factors ensure that Europe remains the central hub for carbon credit trading globally.

Recent Developments

• In July 2025, Climate Impact X entered into a strategic collaboration with MSCI to scale global access to critical carbon market intelligence. This partnership was designed to enhance transparency within the voluntary carbon market by making MSCI’s project ratings and analytical tools available through the exchange's digital platforms. The initiative allowed institutional investors and corporate buyers to evaluate the integrity and risk profiles of various carbon projects more effectively before executing trades. By integrating robust data directly with trading capabilities, the companies aimed to foster greater trust and encourage higher participation rates in the evolving global carbon credit ecosystem.
• In November 2024, the Regional Voluntary Carbon Market Company (RVCMC) officially launched a new dedicated trading exchange for carbon credits during the COP29 climate conference in Baku. The platform was introduced to facilitate the transparent trading of certified carbon offsets and support economic diversification efforts in the Middle East region. To inaugurate the exchange, RVCMC hosted a major auction involving twenty-two domestic and international companies, which offered 2.5 million tons of high-quality carbon credits. The initiative aimed to address liquidity issues and provide a regulated infrastructure for price discovery, thereby strengthening confidence in the voluntary carbon market.
• In September 2024, Google announced a strategic partnership with the direct air capture startup Holocene to procure 100,000 tons of verified carbon removal credits. This collaboration was particularly significant for achieving a breakthrough price of $100 per ton, a figure widely regarded as a critical milestone for the industry's economic feasibility. The arrangement included an upfront financial commitment to assist Holocene in scaling its proprietary technology and delivering the credits by the early 2030s. This development demonstrated how major corporate buyers could leverage their purchasing power to drive down costs and foster innovation within the global carbon credit market.
• In July 2024, Microsoft finalized a record-breaking agreement to purchase 500,000 metric tons of carbon dioxide removal credits from 1PointFive, a subsidiary of Occidental Petroleum. This transaction, recognized as the largest single purchase of its kind to date, highlighted the intensifying corporate demand for high-quality engineered carbon removal solutions. The agreement focused on credits generated from the Stratos direct air capture facility in Texas, which was scheduled to commence operations in the following year. By committing to such a significant volume, Microsoft aimed to support the scaling of the voluntary carbon market infrastructure and accelerate the commercial viability of carbon capture technologies.

Key Market Players

• Indigo Ag Inc
• Climetrek
• Carbon Credit Capital, LLC
• Terra Global Capital, LLC
• South Pole
• Cargill, Incorporated.
• Yara International ASA
• EcoSoul Partners
• Bayer AG
• 3Degrees

By Application	By Project Type	By Region
Removal Project Avoidance Project Combination Project	Forestry and Land Use Agriculture	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Carbon Credit Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Carbon Credit Market, By Application:

• Removal Project
• Avoidance Project
• Combination Project

• Carbon Credit Market, By Project Type:

• Forestry and Land Use
• Agriculture

• Carbon Credit Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE