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Carbon Credit Market for Agriculture, Forestry, and Land Use Overview
The carbon credit market for agriculture, forestry, and land use was valued at $6,283.0 million in 2023, and it is expected to grow at a CAGR of 31.49% and reach $97,100.4 million by 2033. The carbon credit market for agriculture, forestry, and land use is witnessing substantial growth driven by advancements in sustainable practices and technologies. Innovations in precision agriculture, forest management techniques, and sustainable land use strategies are key factors shaping this market. Collaborations between stakeholders such as farmers, forestry companies, and landowners, along with regulatory shifts, are driving the adoption of eco-friendly solutions and best practices. These collaborations emphasize the development of reliable and efficient technologies to optimize carbon sequestration, reduce emissions, and enhance ecosystem health.
Introduction of Carbon Credit for Agriculture, Forestry, and Land Use
KEY MARKET STATISTICS | |
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Forecast Period | 2023 - 2033 |
2023 Evaluation | $6.28 Billion |
2033 Forecast | $97.10 Billion |
CAGR | 31.49% |
Carbon credits within agriculture, forestry, and land use constitute tradable permits representing the reduction or avoidance of greenhouse gas emissions associated with activities such as reforestation, afforestation, soil carbon sequestration, and sustainable land management practices. These credits serve as a measurable unit for incentivizing carbon mitigation efforts, enabling stakeholders to offset their emissions by investing in projects that enhance carbon sequestration or reduce carbon emissions, thus promoting sustainable development while mitigating climate change impacts.
Market Introduction
The global carbon credit market for agriculture, forestry, and land use is a dynamic sector analyzed through distinct application and product segments. In terms of application, the market is categorized into avoidance projects, removal projects, and combination projects. On the product side, the market is segmented by project type, focusing on forestry and land use and agriculture. The product segment further classifies forestry and land use based on the project type, such as reducing emissions from deforestation (REDD+), afforestation, reforestation, and revegetation (ARR), and improved forest management (IFM).
Forestry and land use projects involve activities related to forest conservation, reforestation, and sustainable land management practices. Agriculture projects include carbon sequestration methods in farming practices, such as no-till farming, cover cropping, and agroforestry. Market analysis of the global carbon credit market for agriculture, forestry, and land use employs a comprehensive research methodology. This approach combines primary interviews with industry experts and leaders with thorough secondary research to understand market dynamics. Factors influencing demand, technological advancements, regulatory landscapes, and competitive strategies are analyzed. Additionally, data analysis, market sizing, and forecasting techniques are used to provide insights and strategic recommendations for market players aiming to leverage opportunities in the market.
Industrial Impact
The emergence of the carbon credit market within agriculture, forestry, and land use sectors has significantly impacted industrial practices by incentivizing sustainable land management and carbon sequestration initiatives. Industries engaged in these sectors are increasingly recognizing the economic value of mitigating greenhouse gas emissions through activities such as reforestation, afforestation, and soil carbon sequestration, as these efforts not only contribute to environmental conservation but also generate revenue through the sale of carbon credits.
The key players operating in the carbon credit market for agriculture, forestry, and land use are Indigo Ag, Inc., Carbon Credit Capital, LLC., Terra Global Capital, South Pole, Nori, Inc., The California Air Resources Board, Cargill, Incorporated, Regenerative Agriculture Alliance, Ecosystem Services Market Consortium, Bayer AG, 3Degrees Group, Inc, NATUREOFFICE, Climetrek, EKI Energy Services ltd., and Finite Carbon Corporation, among others. These companies are focusing on strategic partnerships, collaborations, and acquisitions to enhance their product offerings and expand their market presence.
Market Segmentation:
Segmentation 1: by Application
Combination Project to Dominate Carbon Credit Market for Agriculture, Forestry, and Land Use (by Application)
The global carbon credit market for agriculture, forestry, and land use is shifting toward projects that combine both carbon removal and emissions reduction activities. These combination projects are becoming the leading segment, driven by increasing buyer interest and a premium for credits that offer durable carbon removals over simple emissions reductions.
Buyers are showing a preference for credits that represent a combination of removal and avoidance activities. These projects, including activities such as improved forest management (IFM), REDD+, and sustainable agricultural land management, provide a dual benefit of reducing future emissions and removing carbon dioxide from the atmosphere. This dual benefit makes them highly attractive to buyers in the carbon credit market for agriculture, forestry, and land use.
The market also favors projects that offer removals of carbon dioxide from the atmosphere, such as through nature-based solutions such as afforestation/reforestation/revegetation and agro-forestry, as well as industrial carbon removal and biochar production. These removal credits command a premium price, indicating strong demand for projects focused on carbon removal.
The combination project segment, which represents projects that combine both removal and avoidance activities, is expected to drive growth in the global carbon credit market for agriculture, forestry, and land use. Businesses and organizations looking to invest in carbon credit projects should consider the value proposition offered by these combination projects, as they provide a comprehensive approach to carbon mitigation and offer a significant premium in the market.
Segmentation 2: by Project Type
Forestry and Land Use to be Dominant in Carbon Credit Market for Agriculture, Forestry, and Land Use (by Project Type)
The forestry and land use segment has become the leading segment in the global carbon credit market for agriculture, forestry, and land use. This segment plays a critical role in mitigating climate change, providing governments worldwide with a crucial tool to align climate ambitions with policy actions. Efforts are ongoing to enhance the credibility and transparency of this segment, including the development of quality standards and assessment frameworks. These initiatives are vital for building trust and ensuring high integrity across the carbon market.
The increasing convergence between compliance and voluntary carbon markets is a significant trend. It is driven by jurisdictional regulations and tax incentives. Countries such as Singapore have set eligibility criteria for carbon credits used to offset carbon taxes, following similar initiatives in Colombia, Chile, and South Africa. This trend is expected to drive demand in the voluntary carbon market (VCM), especially with the European Union's Carbon Border Adjustment Mechanism (CBAM) set to take effect in 2026. The CBAM will increase carbon prices in non-EU markets, encouraging the use of carbon credits. As a result, the dominance of the forestry and land use segment reflects its crucial role in achieving global climate goals. As efforts continue to enhance and expand these projects, they are poised to remain a cornerstone of the carbon credit market for agriculture, forestry, and land use.
Segmentation 3: by Region
The Asia-Pacific region emerges as a dominant force in the carbon credit market for agriculture, forestry, and land use, driven by several region-specific dynamics. Notably, the region boasts thriving agricultural and forestry sectors alongside significant technological advancements, propelling the market's growth trajectory. Countries such as China, Japan, South Korea, India, and the Rest-of-Asia-Pacific capitalize on their capabilities and supportive government policies to foster innovation and adoption of sustainable practices within these sectors. China, particularly, distinguishes itself for its leadership in implementing initiatives to enhance carbon sequestration and reduce emissions in agriculture, forestry, and land use. Moreover, the region's strong emphasis on research and development accelerates the deployment of efficient technologies, bolstering carbon mitigation efforts. Government incentives, subsidies, and regulations further stimulate the widespread adoption of sustainable practices, solidifying the Asia-Pacific region's prominence in the global carbon credit market for agriculture, forestry, and land use.
Recent Developments in the Carbon Credit Market for Agriculture, Forestry, and Land Use
Demand - Drivers, Limitations, and Opportunities
Market Demand Driver: Corporate Commitments to Achieving Net-Zero Emissions and Sustainability Goals
There has been a significant surge in corporate commitments to achieving net-zero emissions and sustainability goals, reflecting a growing recognition among businesses of their role in addressing climate change and contributing to environmental sustainability. An increasing alliance of nations, businesses, and other entities are committing to achieving net-zero emissions. Over 140 countries, including China, the U.S., India, and the European Union, have established net-zero targets, accounting for approximately 88% of global emissions. Additionally, more than 9,000 companies, over 1,000 cities, more than 1,000 educational institutions, and over 600 financial institutions have joined the race to zero initiative, vowing to implement decisive and prompt measures to cut global emissions in half by the year 2030.
In November 2022, PwC India committed to taking decisive action toward environmental sustainability and achieving net zero greenhouse gas (GHG) emissions while setting science-based targets. Initiatives are currently in progress to reduce carbon emissions from operational processes and decouple business expansion from emissions. Additionally, Ford Motor Company has pledged to achieve carbon neutrality globally by 2050, as outlined in its 21st annual Sustainability Report. The commitment aligns with the Paris Climate Agreement and involves collaborating with Uber in June 2023 in California to strengthen vehicle greenhouse gas standards. Ford intends to focus on three key areas responsible for approximately 95% of its CO2 emissions, namely, vehicle usage, supply chain, and company facilities. This heightened interest in carbon offsetting initiatives leads to the development of more robust and sustainable market for carbon credits, providing opportunities for investments in projects related to agriculture, forestry, and land use that contribute to carbon sequestration and emission reduction.
Market Challenge: Risk of Greenwashing
Carbon offset programs present a significant issue when relied upon without accompanying emissions reduction efforts, hindering progress toward net-zero targets. Criticisms from international non-governmental organizations such as Friends of the Earth, Greenpeace, and World Wildlife Fund-U.K. highlight concerns about these programs fostering a culture of climate pollution.
Carbon offsetting can also become a form of greenwashing when companies prioritize it over in-house emissions reduction efforts, leading to only partial offsetting and temporary solutions. Double-counting carbon credits and investing in projects with no real additional emissions reductions also contribute to greenwashing practices, deceiving the public about companies' true commitment to reducing carbon emissions. To address the challenges associated with carbon offset programs, various steps have been taken to improve transparency, accountability, and effectiveness. Governments and regulatory bodies have implemented stricter standards and verification processes to ensure that offset projects meet rigorous criteria and deliver real emissions reductions.
Market Opportunity: Increase in Adoption of Agroforestry and Sustainable Farming Practices
The agricultural sector plays a pivotal role in carbon trading due to its dual capacity to emit and sequester carbon. Activities such as tilling, fertilizer application, and livestock farming emit greenhouse gases, while practices such as agroforestry, conservation tillage, and soil carbon sequestration remove carbon from the atmosphere, storing it in the soil. Carbon trading in agriculture presents a pathway to incentivize farmers toward eco-friendly practices, mitigating climate change effects. By engaging in carbon offset projects, farmers can generate additional income by selling carbon credits. Embracing carbon abatement techniques aids in soil carbon sequestration, contributing to greenhouse gas reduction and climate change mitigation. This framework not only financially motivates farmers but also fosters the adoption of sustainable land-use practices, conserving natural resources and minimizing environmental impacts.
Within the carbon credit market for agriculture, forestry, and land use, individual farmers may encounter challenges navigating the complexities of selling carbon credits. Yet, through the coordination of collectives such as Farmer Producer Organizations (FPOs) and cooperatives, participation in carbon trading becomes more accessible. These entities play a crucial role in mobilizing farmers, promoting the adoption of carbon abatement practices, and efficiently managing the sale of accumulated carbon credits.
How can this report add value to an organization?
Product/Innovation Strategy: The product segment helps the reader understand the different applications of carbon credit for agriculture, forestry, and land on the basis of application (removal project, avoidance project, and combination project), project type (forestry and land use and agriculture), The market is poised for significant expansion with ongoing advancements, increased investments, and growing awareness of the importance of carbon credits. Therefore, the carbon credit for agriculture, forestry, and land use businesses is a high-investment and high-revenue generating model.
Growth/Marketing Strategy: The carbon credit market for agriculture, forestry, and land use has been growing at a rapid pace. The market offers enormous opportunities for existing and emerging market players. Some of the strategies covered in this segment are mergers and acquisitions, product launches, partnerships and collaborations, business expansions, and investments. The strategies preferred by companies to maintain and strengthen their market position primarily include product development.
Competitive Strategy: The key players in the carbon credit market for agriculture, forestry, and land use analyzed and profiled in the study include project developers and buyers. Additionally, a comprehensive competitive landscape such as partnerships, agreements, and collaborations are expected to aid the reader in understanding the untapped revenue pockets in the market.
Research Methodology
Factors for Data Prediction and Modeling
Market Estimation and Forecast
This research study involves the usage of extensive secondary sources, such as certified publications, articles from recognized authors, white papers, annual reports of companies, directories, and major databases to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the carbon credit market for agriculture, forestry, and land use.
The process of market engineering involves the calculation of the market statistics, market size estimation, market forecast, market crackdown, and data triangulation (the methodology for such quantitative data processes is explained in further sections). The primary research study has been undertaken to gather information and validate the market numbers for segmentation types and industry trends of the key players in the market.
Primary Research
The primary sources involve industry experts from the carbon credit market for agriculture, forestry, and land use and various stakeholders in the ecosystem. Respondents such as CEOs, vice presidents, marketing directors, and technology and innovation directors have been interviewed to obtain and verify both qualitative and quantitative aspects of this research study.
The key data points taken from primary sources include:
Secondary Research
This research study of the carbon credit market for agriculture, forestry, and land use involves extensive secondary research, directories, company websites, and annual reports. It also makes use of databases, such as Hoovers, Bloomberg, Businessweek, and Factiva, to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the global market. In addition to the aforementioned data sources, the study has been undertaken with the help of other data sources and websites, such as IRENA and IEA.
Secondary research was done in order to obtain crucial information about the industry's value chain, revenue models, the market's monetary chain, the total pool of key players, and the current and potential use cases and applications.
The key data points taken from secondary research include:
Key Market Players and Competition Synopsis
The companies that are profiled in the carbon credit market for agriculture, forestry, and land use have been selected based on inputs gathered from primary experts and analyzing company coverage, product portfolio, and market penetration.
Some of the prominent companies in this market are:
Companies that are not a part of the aforementioned pool have been well represented across different sections of the report (wherever applicable).
Scope and Definition