by The climate and carbon finance market involves financing climate change mitigation and adaption projects as well as trading carbon credits. Carbon finance projects focus on reducing greenhouse gas emissions through renewable energy development, energy efficiency, forestation and reforestation, sustainable transportation, waste management etc. These projects help industries and countries comply with emissions reduction targets set under international treaties like the Paris Agreement. The growth of this market is necessary to transition the world economy to a low carbon future and mitigate climate change. Carbon credits generated from such projects are traded in regulatory and voluntary markets.
The global 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 3.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends: One of the key trends in the climate and carbon finance market is the mainstreaming of sustainability. There is growing public interest and societal pressure for organizations and governments to address climate change and reduce emissions. Investors are also increasingly demanding that their portfolios factor in environmental, social and governance (ESG) criteria. As a result, more financial institutions are launching climate-focussed funds and offerings to tap into this demand. Companies and jurisdictions involved in carbon-intensive industries are also exploring climate finance to transition to low-carbon business models and meet sustainability goals. This will help drive greater investment flows into climate projects and initiatives globally.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate as climate and carbon finance market requires large initial investments and regulatory compliances. However, new fintech entrants can disrupt the market.
Bargaining power of buyers: The bargaining power of buyers is high due to the presence of many firms offering similar climate and carbon finance solutions. Buyers can opt for alternatives easily.
Bargaining power of suppliers: The bargaining power of suppliers is moderate as there are many technology solution providers and exchanges available. However, suppliers hold technological expertise.
Threat of new substitutes: The threat of substitutes is low as there are limited direct substitutes available for climate and carbon finance solutions. Renewable energy and emission reduction programs are potential substitutes.
Competitive rivalry: The competitive rivalry in the market is high due to the presence of many global and regional players offering similar solutions. Players compete on pricing, technology, and coverage.
Key Takeaways
The global climate and carbon finance market size is expected to witness high growth during the forecast period of 2023 to 2030. The market size for 2024 is projected to reach US$ 459.58 Mn, indicating lucrative opportunities.
Regional analysis
Europe dominates the market currently due to stringent climate policies and carbon pricing mechanisms in the region. Countries such as the UK, Germany, and France are major contributors. Asia Pacific is expected to be the fastest-growing market led by China, India, and other developing nations taking initiatives to meet emissions targets and invest in clean technologies.
Key players
Key players operating in the climate and carbon finance market are International Paper Company, Georg Fischer, Veolia, Suez, and Covanta Holding Corporation. International Paper is one of the leading pulp and paper manufacturers focusing on cutting emissions and using renewable biomass in operations. Georg Fischer is a Swiss firm engaged in water technology, casting technology, and piping systems businesses and offers carbon offset programs.
