The Climate And Carbon Finance Market is estimated to be valued at US$ 459.58 Mn in 2023 and is expected to exhibit a CAGR of 29. % over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
The climate and carbon finance market deals with financing projects and programmes aimed at mitigating global warming and climate change. It involves trading of carbon credits generated by such projects to offset greenhouse gas emissions. Carbon finance helps reduce the cost of climate change mitigation and adaptation while also generating income.
Market key trends:
One of the major trends driving the climate and carbon finance market is the increasing awareness related to environment conservation and sustainability. Various initiatives taken by governments and international bodies to curb greenhouse gas emissions and transition to a low carbon economy have boosted the demand for carbon credits. Organizations are increasingly investing in carbon offsetting projects to reduce their carbon footprint. Moreover, stringent regulations regarding corporate environmental responsibility are further propelling the climate and carbon finance market growth.
Threat of new entrants: The threat of new entrants in the climate and carbon finance market is moderate as it requires high capital investment and technical expertise in carbon accounting, GHG emission tracking technology.
Bargaining power of buyers: The bargaining power of buyers is high in this market as buyers can negotiate for favorable carbon prices and choose from a wide range of project developers and intermediaries in the industry.
Bargaining power of suppliers: The bargaining power of suppliers is moderate given the differentiated nature of carbon offset projects which involves negotiations on additionality,baselines and ownership of carbon credits.
Threat of new substitutes: The threat of new substitutes is low due to the lack of viable alternatives to carbon offsets for achieving emission reduction targets.
Competitive rivalry: Fierce among existing firms.
Strength: Large untapped market potential as climate change concerns gain traction globally. Varied project typologies offer multiple opportunities.
Weakness: Complex regulatory frameworks create compliance challenges. Project additionality determination involves high transaction costs.
Opportunity: Growing demand from corporations towards achieving net zero goals. Emerging carbon pricing mechanisms boost market expansion.
Threats: Technological disruptions may undermine conventional offsetting models. Stringent carbon accounting standards raise compliance barriers.
The global climate and carbon finance market is expected to witness high growth, exhibiting CAGR of 29% over the forecast period, due to increasing concerns over climate change and strengthening of carbon reduction targets worldwide. Europe currently dominates the market owing to the long-established emissions trading system in the region. However, the Asia Pacific region is emerging as a high growth market for climate and carbon financing supported by the mushrooming of carbon pricing initiatives across China, South Korea, Japan and other developing Asian countries.
Regional analysis: Europe accounts for the largest share in the global climate and carbon finance market currently. However, the Asia Pacific region is projected to witness the fastest growth during the forecast period. China has emerged as the highest emitter implementing carbon trading in several cities and provinces. Other major Asian countries including Japan, South Korea and India have also unveiled plans to adopt carbon pricing mechanisms to meet their NDC commitments.
Key players analysis: Key players operating in the climate and carbon finance market are Climate Finance Partners (United States), Carbon Credit Capital (United States), ClimateCare (United Kingdom), South Pole Group (Switzerland), Climate Trust Capital (United States), Carbon Clear (United Kingdom), EcoAct (France), First Climate (Germany), ClimatePartner (Germany), Ecosphere+ (United Kingdom), Verra (United States), Gold Standard (Switzerland), Natural Capital Partners (United Kingdom), Climate Friendly (Australia), Forest Carbon (United Kingdom)