The global carbon credit market has grown from a small environmental tool into one of the most powerful weapons against climate change. As businesses, governments, and investors push toward net-zero targets, carbon credits are helping balance emissions, finance green projects, and speed up the shift toward sustainability.
According to Astute Analytica, the market was valued at US$1,142.40 billion in 2024 and is projected to reach US$4,983.7 billion by 2035, growing at a compound annual growth rate (CAGR) of 18%.
This rise reflects the worldwide momentum toward carbon pricing, stronger climate pledges, and rapid growth in both voluntary and compliance carbon markets. In 2023 alone, more than 155 million carbon credits were retired, while 258 million credits were traded worldwide.
Why Carbon Credits Are Becoming Essential
Carbon credits allow companies to offset their emissions by funding projects that either remove carbon from the air or prevent new emissions. Examples include forest restoration, renewable energy installations, and methane capture. These credits are now a key component of climate strategies, as regulations are tightening and more companies are making net-zero commitments.
Major financial support is driving strong growth in the carbon credit market. In 2024, the U.S. Department of Energy committed $2.5 billion to boost carbon credit projects. In just the first quarter of 2025, investors put over $1 billion into carbon capture startups.
Furthermore, IEA predicts, globally, carbon capture capacity is set to exceed 100 million tonnes per year by 2025. However, to meet climate goals, it needs to multiply 100 times more by 2050.
Corporate Net-Zero Pledges Fuel Demand
One of the biggest forces behind rising demand is corporate climate action. Companies are increasingly committing to net-zero targets, and carbon credits play a vital role in reaching those goals. In 2023, corporations bought and retired at least 161 million credits to meet their sustainability goals.
At present, the energy sector is the largest buyer, followed by financial services. Internal pricing systems are also taking off, with over 400 companies implementing an internal carbon price to guide investments in decarbonization.
Nature-Based Solutions Take the Lead
Among all categories, nature-based solutions have become the backbone of the carbon credit market. Projects like reforestation and afforestation are especially popular because they not only capture carbon but also support biodiversity and local communities.
Their credibility is reinforced by organizations such as SBTi and the Carbon Credit Quality Initiative (CCQI), which push for strict verification standards and transparency.
Technology-Driven Carbon Removals: The New Frontier
Technology-based carbon removal is emerging as a promising long-term investment. In early 2024, 6.7 million tons of CO2 removal had already been contracted through long-term agreements.
These methods, such as Direct Air Capture (DAC), come at a high price—around US $600 per ton in 2023—but corporations see them as essential for permanent carbon removal. For example, Frontier, backed by Stripe, Alphabet, and Meta, has pledged over US$1 billion for permanent carbon removal projects.
Tech giant Microsoft has also contracted more than 5 million tons of carbon removal. Projects like Climeworks’ Mammoth DAC plant, which went online in 2024 and captures 36,000 tons of CO2 annually, prove that this technology is commercially viable.
Aviation Regulations Drive Strong Demand
The aviation sector is another major growth driver. Under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), demand is expected to reach 64 to 158 million credits in 2025.
The aviation compliance market, known as CORSIA, is emerging as a major driver of carbon credit demand. Between 2024 and 2026, demand is expected to reach 101–148 million credits.
Regional Trends in Carbon Trading
The carbon credit market is global, but demand is concentrated in certain regions.
- North America leads with 66.8 million credits retired in 2023, followed by Europe at 52.4 million credits.
- Asia is quickly catching up, retiring 28.1 million credits in 2023, signaling growing participation.
- Europe remains the largest market, driven by its European Union Emissions Trading System (EU ETS)—the most established compliance market worldwide.
- Asia Pacific is seeing the fastest growth, especially in China, South Korea, and Australia, thanks to national trading schemes and a large industrial base.
- Latin America and Africa are becoming key suppliers, with vast forests and renewable energy resources supporting offset projects.
Key Players in the Carbon Credit Market
Several organizations are leading the development, verification, and trade of carbon credits.
- 3Degrees, South Pole Group, Finite Carbon, Terrapass, Moss.earth – Project developers and brokers.
- Verra, Gold Standard – Verification bodies ensuring credibility.
- Xpansiv, Pachama – Digital platforms bringing transparency and data tracking.
These players are shaping the infrastructure needed to scale carbon credit markets globally.
Despite these, the carbon credit market still faces hurdles despite its rapid growth. Buyers demand proof that credits deliver real, lasting emission cuts, especially after greenwashing scandals. Prices swing sharply by project type and location, adding uncertainty.
Fragmented regulations across regions also slow global harmonization and limit smooth market expansion.
Blockchain and the Future of Carbon Credit Trading
One of the biggest opportunities for the carbon credit market lies in blockchain technology. By recording transactions in a secure, unchangeable way, blockchain can prevent fraud, improve transparency, and make trading more efficient. Combined with data analytics, it can track every detail of a transaction and ensure credibility.
This technology could also create new jobs in carbon accounting and analytics while making credits more attractive to investors.
Emerging Trends in Blockchain and Carbon Credit Tracking
An analysis showed, this year, over 60% of new carbon credit platforms adopted blockchain, particularly in agriculture and forestry. It was for enhancing transparency, speeding verification, and preventing double issuance. The future of blockchain in carbon credit tracking is shaping up as follows:
- Regulatory Alignment: Global authorities are likely to adopt blockchain standards, ensuring uniformity and trust in carbon markets.
- DAO-Driven Markets: Blockchain-based Decentralized Autonomous Organizations (DAOs) will enable community-led governance and rapid response to market and climate shifts.
- Remote Verification: Satellites, drones, IoT, and AI will provide continuous remote monitoring, simplifying certification and cutting costs.
- Micro-Credit Access: Fractional and micro-credit trading will let smallholders and local projects participate in global carbon finance.
Blockchain-powered, multi-tech ecosystems are set to make carbon credit tracking secure, transparent, and scalable, supporting the push toward net-zero.
