Climate and carbon finance refers to financing approaches and tools for supporting projects that mitigate greenhouse gas emissions and support climate change adaptation. Key products in this market include carbon offsets, carbon asset management, green tax credits, carbon trading etc. These instruments help scale up investment in renewable energy, energy efficiency, forestation and other carbon reduction activities.
The global climate and carbon finance market is estimated to be valued at US$ 367 Bn in 2023 and is expected to exhibit a CAGR of 33.7% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity: Reducing Carbon Emissions
One of the major opportunity in the climate and carbon finance market is reducing carbon emissions. Carbon emissions are one of the major contributors to climate change and global temperatures rise. Financial instruments in this market like carbon offsets and carbon trading provide incentives to reduce carbon footprint from various industries and activities. They enable companies and governments to carry out more environment friendly projects and technologies to cut down on carbon emissions. Investing in green activities like renewable energy generation and energy efficiency can help lower around 30 GtCO2e of emissions per year by 2030. The rising focus on meeting Paris agreement targets and achieving net zero goals will further drive more investments in this market to lower carbon emissions globally.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate. The climate and carbon finance market requires significant upfront capital investments and expertise in carbon accounting, verification and reporting.
Bargaining power of buyers: The bargaining power of buyers is moderate to high given the presence of a large number of buyers seeking financing for climate change mitigation and adaptation projects.
Bargaining power of suppliers: The bargaining power of suppliers is moderate as a few large financers and verification bodies provide majority of the services in this emerging market.
Threat of new substitutes: The threat of new substitutes is low as there are limited alternative modes of financing climate change projects and goals.
Competitive rivalry: The competitive rivalry is high among existing financial institutions and verification bodies given the emergence and expected high growth of this market.
SWOT Analysis
Strengths: Financial viability of climate projects, Availability of supportive government policies on climate financing, Increasing focus on achieving climate goals.
Weaknesses: Lack of standardization across carbon accounting frameworks, High initial capital costs for new entrants, Risk of project failure or non-additionality.
Opportunities: Growth in investments towards renewables and clean technologies, Emergence of carbon markets in developing nations, Innovations in blockchain for carbon credits.
Threats: Changes in political support and policies, Stricter regulations around carbon credits and reporting.
Key Takeaways
The Global Climate And Carbon Finance Market Size is expected to witness high growth over the forecast period of 2023 to 2030, growing at a CAGR of around 33.7%. The market size for 2023 is estimated to be around US$ 367 Bn.
Regional analysis includes- Europe dominates the climate and carbon finance market currently owing to strong government support for climate actions and presence of major verifiers. Asia Pacific is expected to grow at the fastest pace during the forecast period driven by the emergence of domestic carbon markets in large economies like China and India and increasing investments towards renewable energy sources.
Key players operating in the climate and carbon finance market include Climate Finance Partners, Carbon Credit Capital, ClimateCare, South Pole Group, Climate Trust Capital, Carbon Clear, EcoAct, First Climate, ClimatePartner, Ecosphere+, Verra, Gold Standard, Natural Capital Partners, Climate Friendly and Forest Carbon.
For More Insights, Read: https://www.newswirestats.com/climate-and-carbon-finance-market-demand-growth-and-regional-outlook-by-2030/
