The global carbon credit market is expected to grow rapidly, with projections estimating a surge from $1.5 billion in 2024 to $35 billion by 2030, and potentially $200 billion by 2050, provided environmental targets are met, according to a report by MSCI.
This growth is attributed to improvements in credit quality and project integrity. MSCI’s data shows a significant drop in the share of the lowest-rated credits (CCC), from 29% in 2022 to 15% in 2024. At the same time, high-rated credits (A or AA) have doubled, now representing 12% of the market. These trends reflect increasing demand for credible carbon offset initiatives, particularly those employing engineered and nature-based carbon removal solutions.
Analysis of over 4,000 voluntary carbon projects reveals that nearly half of retired credits up to mid-2024 originated from lower-rated projects. However, newer projects aligned with the stricter Core Carbon Principles, introduced in 2024, are setting a higher benchmark for integrity and reliability.
Despite criticisms suggesting carbon credits allow companies to delay emission reductions, MSCI’s review of 8,844 firms between 2017 and 2022 found otherwise. Companies utilizing carbon credits not only demonstrated greater environmental transparency but also reduced Scope 1 and 2 emissions at a median annual rate of 3.6%—more than twice the reduction rate of non-users.
Countries such as Australia, South Africa, Colombia, and Singapore have already integrated carbon credits into their regulatory frameworks while emerging policies in the UK and EU suggest broader acceptance. With this momentum, the market is poised to play a vital role in achieving global decarbonization goals.