Carbon Offset Market - Global Industry Size, Share, Trends, Opportunities, and Forecast, Segmented By Type (Carbon Compliance Market, Voluntary Carbon Market), By Project Type (Natural Offsets, Technological Offsets), By End-User (Power, Energy, Aviation, Transportation, Industrial, Buildings, and Others), By Region and Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 600.83 Billion
CAGR (2026-2031)	25.96%
Fastest Growing Segment	Energy
Largest Market	North America
Market Size (2031)	USD 2399.65 Billion

Market Overview

The Global Carbon Offset Market will grow from USD 600.83 Billion in 2025 to USD 2399.65 Billion by 2031 at a 25.96% CAGR. Carbon offsets are tradeable instruments representing the reduction or removal of one metric ton of carbon dioxide equivalent, utilized by organizations to counterbalance emissions that cannot be eliminated internally. The market is fundamentally driven by the proliferation of corporate net-zero commitments and the simultaneous expansion of government-mandated pricing schemes, which create sustained demand for mitigation credits. According to the World Bank, in 2024, carbon pricing instruments significantly expanded to cover approximately 24% of global greenhouse gas emissions.

However, the sector confronts a substantial impediment regarding the verification and integrity of issued credits, which has fueled "greenwashing" concerns and reduced buyer confidence. This scrutiny regarding project quality has caused a measurable contraction in trading activity as stakeholders await more robust governance standards. According to Ecosystem Marketplace, in 2024, the total reported transaction value of the voluntary carbon market declined by 29% to $535 million due to these persistent market challenges.

Key Market Drivers

The implementation of stringent government environmental regulations and net-zero policies serves as a primary structural driver for the Global Carbon Offset Market. As nations operationalize their climate commitments, they are establishing compliance mechanisms that mandate emission reductions, thereby generating substantial revenue and creating a baseline of demand for mitigation credits. This regulatory pressure forces high-emitting sectors to integrate carbon pricing into their financial models, transitioning the market from voluntary participation to legally binding obligations. According to the World Bank, May 2024, in the 'State and Trends of Carbon Pricing 2024', global revenues generated from carbon taxes and emissions trading systems reached a record USD 104 billion in 2023. This capitalization ensures that carbon markets are becoming essential tools for regulatory adherence.

Simultaneously, the escalating corporate adoption of ESG and sustainability frameworks is amplifying demand for high-quality offsets to satisfy stakeholder expectations. Organizations are aggressively aligning with scientific decarbonization pathways, necessitating credits to compensate for residual emissions that internal abatement cannot yet resolve. According to the Science Based Targets initiative, March 2024, in the 'SBTi Monitoring Report 2023', the number of corporations with validated science-based targets increased by 102% in 2023. This surge in commitment translates into sustained physical demand for credits, even amidst market valuation corrections. Highlighting this resilience, according to MSCI, in 2024, the volume of carbon credits retired in the voluntary market rose by 6% throughout 2023. Consequently, the integration of offsets into corporate strategies remains a critical factor propelling market activity.

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Key Market Challenges

The challenge regarding the verification and integrity of issued credits is directly hampering the growth of the "Global Carbon Offset Market" by severing the essential trust required for trade. As scrutiny over "greenwashing" intensifies, corporate buyers have become deeply risk-averse, pausing procurement rather than facing the reputational damage associated with low-quality projects. This hesitation has stalled market momentum as stakeholders shift their focus entirely to "high-integrity" credits which are currently in extremely short supply, effectively freezing liquidity for the broader market that no longer meets these elevated expectations.

This supply-side bottleneck is clearly quantified by the scarcity of credits that qualify under new and stringent global standards. According to the Integrity Council for the Voluntary Carbon Market (ICVCM), in 2025, the volume of credits approved under its Core Carbon Principles (CCPs) reached 51 million, representing approximately 4% of the total issued market volume from 2024. This statistic indicates that the vast majority of the market's existing inventory does not yet carry the high-integrity label buyers now demand, directly explaining the contraction in trading activity as corporations wait for a larger pool of verified and trustworthy credits to become available.

Key Market Trends

The Operationalization of Paris Agreement Article 6 Trading Mechanisms is altering market dynamics by establishing a sovereign-backed compliance layer that integrates with voluntary activities. This trend moves the sector towards a cohesive global trading architecture where countries authorize credit transfers to meet Nationally Determined Contributions, thereby mitigating double-counting risks and enhancing asset validity. This regulatory clarity is accelerating government-to-government partnerships and creating a new asset class of "correspondingly adjusted" credits that command higher confidence. According to the Florence School of Regulation, October 2025, in the 'Carbon Markets under Article 6 of the Paris Agreement' report, as of March 2025, 97 bilateral agreements between 59 countries were adopted, with 155 pilot projects recorded under Article 6.2.

Simultaneously, the Shift from Spot Market Purchases to Long-Term Offtake Agreements allows buyers to hedge against price volatility and secure scarce high-quality inventory. Unlike the historic reliance on readily available spot credits, this procurement model involves multi-year forward contracts that finance project development upfront, particularly for capital-intensive engineered removal technologies. This structural evolution decouples immediate liquidity from future supply security, allowing buyers to lock in prices for credits that will be delivered years later. According to CDR.fyi, February 2025, in the '2024 Year in Review' report, the total volume of durable carbon removal purchased reached nearly 8 million tonnes in 2024, a 78% growth driven by these forward commitments, while actual physical deliveries remained significantly lower at approximately 318,000 tonnes.

Segmental Insights

The energy segment represents the fastest-growing category in the Global Carbon Offset Market, driven by the escalating global demand for renewable power projects. Corporations are prioritizing investments in wind, solar, and hydroelectric initiatives to fulfill voluntary net-zero pledges and comply with international climate accords. This expansion is supported by mechanisms linked to the United Nations Framework Convention on Climate Change, which validate clean energy infrastructure as a verifiable method for emission reduction. As industries seek scalable solutions to neutralize their carbon footprint, the high reliability of renewable energy credits continues to fuel this rapid sectoral expansion.

Regional Insights

North America maintains a dominant position in the Global Carbon Offset Market driven by robust regulatory frameworks and widespread corporate sustainability initiatives. The presence of established compliance mechanisms, such as the Cap-and-Trade Program managed by the California Air Resources Board, creates consistent demand for verified offset credits. Furthermore, the region hosts numerous multinational enterprises that actively purchase voluntary credits to meet internal net-zero targets. This combination of policy-driven requirements and private sector investment creates a stable environment for market expansion and project development.

Recent Developments

• In November 2024, Microsoft and the Royal Bank of Canada announced a partnership with Deep Sky to purchase 10,000 tons of carbon removal credits. This transaction supports Deep Sky Labs, a new carbon removal innovation center in Alberta, Canada, which serves as a testing ground for multiple direct air capture technologies. The agreement allows the buyers to access a diverse portfolio of removal solutions while enabling the developer to validate and scale various methods in a real-world environment. This collaboration underscores the increasing corporate demand for high-quality, technology-based carbon removal credits to meet ambitious sustainability targets.
• In October 2024, Morgan Stanley entered into a long-term agreement with Climeworks to purchase 40,000 tons of carbon dioxide removal credits. This partnership, which extends through 2037, represents one of the largest contracts for the direct air capture provider to date. The investment supports the deployment of Climeworks' technology in the United States, specifically as part of the Project Cypress Direct Air Capture Hub in Louisiana. The financial institution's commitment highlights the growing role of the banking sector in financing nascent climate technologies and aligns with its broader strategy to achieve net-zero financed emissions by 2050.
• In September 2024, Google announced a collaboration with Holocene, a direct air capture technology developer, to purchase carbon removal credits at a record-low price. The technology company committed to paying $100 per ton for 100,000 tons of carbon dioxide removal, with delivery scheduled for the early 2030s. This agreement aims to accelerate the commercial viability of direct air capture by providing upfront financial support and validating the lower-cost potential of Holocene's approach. The deal leverages the U.S. government’s 45Q tax credit, which provides additional financial incentives for carbon sequestration projects, further supporting the development of scalable carbon removal solutions.
• In May 2024, Climeworks officially commenced operations at its new direct air capture and storage facility, Mammoth, located in Iceland. This plant represents a significant expansion in the company's capacity to remove carbon dioxide from the atmosphere, being approximately ten times larger than its predecessor, Orca. Designed with a nameplate capture capacity of up to 36,000 tons of CO2 annually, the facility utilizes geothermal energy to power its processes. The captured carbon is then permanently stored underground through a mineralization process facilitated by a partner organization. This launch marks a critical step in scaling direct air capture technology to meet global climate goals.

Key Market Players

• NativeEnergy, Inc.
• 3Degrees Group, Inc.
• Terrapass
• EKI Energy Services Ltd.
• Ecologi Action Ltd
• Climeworks AG
• Climate Vault, Inc.
• Watershed Technology, Inc.
• ClearCompany, Inc.
• Carbonfund

By Type	By Project Type	By End-User	By Region
Carbon Compliance Market Voluntary Carbon Market	Natural Offsets Technological Offsets	Power Energy Aviation Transportation Industrial Buildings and Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• Carbon Offset Market, By Type:

• Carbon Compliance Market
• Voluntary Carbon Market

• Carbon Offset Market, By Project Type:

• Natural Offsets
• Technological Offsets

• Carbon Offset Market, By End-User:

• Power
• Energy
• Aviation
• Transportation
• Industrial
• Buildings
• and Others

• Carbon Offset 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