Forestry and Landuse Carbon Credit Market Size - By Type (Voluntary, Compliance) Regional Outlook, Competitive Market Share & Forecast, 2024 – 2032

Forestry & Landuse Carbon Credit Market Size

Forestry & Landuse Carbon Credit Market was valued at USD 22.4 Billion in 2023 and is set to grow at a CAGR of over 13.9% between 2024 and 2032, owing to the grappling urgent need to address climate change and the role of carbon credits in incentivizing sustainable land management practices. For instance, in November 2023, the world bank unveiled plans to launch a mechanism for certifying forest carbon credits in the future along with enhancing the credibility and transparency of voluntary carbon markets. This burgeoning market reflects a growing recognition of the crucial role that forests and land use play in sequestering carbon dioxide and mitigating the impacts of greenhouse gas emissions.
 

Growing emphasis on community engagement and indigenous rights within the carbon credit market coupled with the rising demand for nature-based solutions is boosting the industry landscape. The key industry players are recognizing the importance of involving local communities, especially indigenous groups, in the development and implementation of carbon offset projects. This shift reflects a broader acknowledgment of the need for equitable and inclusive solutions that respect the rights and knowledge of the communities directly impacted by these initiatives. Moreover, the market is witnessing a move away from top-down approaches, with a greater focus on partnerships that empower local communities and ensure the long-term success of carbon credit projects.

Technological advancements are playing a pivotal role in shaping the forestry & landuse carbon credit market, where satellite imaging, machine learning, and blockchain technology are being harnessed to enhance monitoring, reporting, and verification processes. These innovations provide more accurate and transparent data, addressing concerns about the legitimacy of carbon offset projects. Investors and buyers are increasingly demanding robust monitoring systems to ensure the credibility of the carbon credits they purchase. This technological evolution not only fosters trust within the market but also facilitates the scaling up of projects, ultimately contributing to a more effective and efficient carbon credit ecosystem.
 

COVID- 19 Impact

The COVID-19 pandemic disrupted the forestry and land use carbon credit market, causing delays in project implementation due to lockdowns. Economic uncertainties led to challenges in funding and investment, while market volatility affected carbon credit prices. The pandemic accelerated the adoption of remote sensing technologies, offering potential enhancements in monitoring practices within the industry.
 

Forestry & Landuse Carbon Credit Market Trends

Rising environmental concerns along with favoring regulatory regimes owing to increasing emission and continuous deforestation will complement the business. Many companies across various industries are setting ambitious sustainability targets, aiming to balance their carbon emissions by investing in projects that sequester or reduce carbon dioxide. Forestry and land use projects including afforestation, reforestation, and sustainable land management, provide viable options for companies to offset their carbon footprints. This trend is not limited to environmentally conscious companies, also mainstream businesses are recognizing the importance of integrating carbon credits into their overall sustainability strategies to meet consumer expectations and regulatory requirements.

Regulatory frameworks such as cap-and-trade systems exist in some regions, as a result voluntary carbon markets are gaining momentum across the globe. Companies, driven by a sense of corporate responsibility and the desire to enhance their environmental credentials, are voluntarily purchasing carbon credits to demonstrate their commitment to mitigating climate change. Furthermore, forestry and land use projects, with their direct impact on carbon sequestration and biodiversity conservation, are positioned as attractive options within the voluntary market.
 

Forestry & Landuse Carbon Credit Market Analysis

Rising concept of carbon offsetting as a service along with the development of innovative financial instruments are augmenting demand for forestry & landuse carbon credit across the globe. Specialized companies along with government regulations are emerging to facilitate the process of identifying, investing in, and managing carbon offset projects on behalf of businesses. These service providers offer expertise in project selection, monitoring, and verification, alleviating the complexities associated with participating in the carbon credit market. This trend allows businesses to outsource the intricacies of carbon offsetting, making it more accessible for a broader range of companies, including those without extensive environmental expertise.
 

The compliance forestry & landuse carbon credit market is set to surpass USD 68 billion by 2032. The development of innovative financial instruments including carbon credit indices and futures contracts, are emerging to provide new avenues for investors to engage with the market, thereby shaping the market outlook. These instruments allow for risk management and provide liquidity, attracting institutional investors who seek exposure to the growing carbon credit market. Additionally, this financialization of carbon credits introduces new dynamics, fostering market maturity and stability, thereby boosting the industry landscape.
 

• Technology is playing a crucial role in streamlining processes within the forestry & landuse carbon credit market. Blockchain technology, for instance, is being explored for its potential to enhance transparency and traceability in carbon credit transactions.
   
• Smart contracts on blockchain platforms automates and secure the entire carbon credit lifecycle, from project development to credit issuance and trading. Such technological advancements are not only improving the efficiency of the market but also addressing concerns related to the credibility and integrity of carbon credits.
   
• As businesses strive for sustainability and carbon neutrality, the demand for carbon credits associated with forestry and land use is set to grow. The emergence of voluntary markets, carbon offsetting as a service, financial instruments, and technological innovations collectively contribute to a more mature and accessible carbon credit market, providing businesses with diverse opportunities to align their operations with climate action and environmental stewardship.

The North America forestry & landuse carbon credit market will register gains at nearly 15.1% up to 2032. Rising confluence of environmental consciousness coupled with the increasing concerns for corporate sustainability goals catering to global climate goals will sway the industry growth. Despite these, increasing integration of carbon credits into business strategies as companies seek to offset their emissions and align with global climate objectives is the other driving force to the market. This trend is particularly pronounced in sectors including technology, finance, and agriculture, where companies are leveraging carbon credits from forestry and land use projects to meet net-zero targets.
 

• Regulatory developments at both federal and state levels are shaping the landscape of the North American carbon credit industry. Policies promoting forest conservation, afforestation, and sustainable land management are incentivizing businesses to actively participate in carbon offset programs.
   
• The voluntary carbon market in North America is also expanding rapidly, with corporations voluntarily investing in forestry and land use projects to enhance their environmental profiles and meet stakeholder expectations.
   
• Innovative financial instruments and technological advancements are playing a pivotal role in facilitating transactions and ensuring the integrity of carbon credits. As businesses increasingly view carbon credits as essential components of their sustainability portfolios, the North American carbon credit industry for forestry and land use is poised for continued expansion and influence.
   

Forestry & Landuse Carbon Credit Market Share

Market stakeholders are placing emphasis on various performance indicators, with a particular focus on certified forestation projects and the corresponding credits issued, as these metrics significantly influence emission reduction outcomes. In addition to traditional measures, key players in the industry, such as project brokers and developers, are formulating their own assessments of market share. These estimates are derived from the projects under their management and the volume of credits issued.
 

Forestry & Landuse Carbon Credit Market Companies

Prominent industries operative in the forestry & landuse carbon credit industry includes:

• The Carbon Trust
• Climate Impact Partners
• South Pole
• 3Degrees
• VERRA
• TerraPass
• CarbonClear
• PwC
• EcoAct
• ClimeCo LLC.
• Ecosecurities
• ALLCOT
• Atmosfair
• The Carbon Collective Company
• Sterling Planet Inc.
• WGL Holdings, Inc.
• Green Mountain Energy Company
   

Forestry & Landuse Carbon Credit Industry News

• In December 2023, the Madagascar received USD 8.8 Million for Forest Carbon Credits that will further protect the remaining forests and communities. The initial payment marks the commencement of the first installment within the nation's Emission Reductions Payment Agreement (ERPA) with the Forest Carbon Partnership Facility (FCPF) of the World Bank. This agreement will mobilize a total of USD 50 million, dedicated to the reduction of up to 10 million tons of carbon dioxide equivalent (CO2e) emissions along the eastern coast of the country's rainforest by the conclusion of the year 2024.
   
• In June 2023, the Integrity Council for the Voluntary Carbon Markets and the Voluntary Carbon Markets Integrity Initiative, a joint commitment to provide a coordinated set of standards throughout 2023 aimed at establishing an integrated market integrity framework for high-quality, transparent, credible, and accountable carbon credits. This framework provides for both carbon removal credits and carbon reduction credits, which is a key difference when compared to the EU Carbon Removal Certification.
   

This forestry & landuse carbon credit market research report includes in-depth coverage of the industry with estimates & forecast in terms of ‘USD Billion’ from 2019 to 2032, for the following segments:

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Market, By Type

• Voluntary
• Compliance

The above information has been provided for the following regions:

• North America
• Europe
• Asia Pacific
• Middle East & Africa
• Latin America