Strategic Intelligence: Carbon Offsets

Carbon offsets are tradable certificates representing one tonne of carbon dioxide (CO₂) either avoided or removed from the atmosphere. Companies use them to compensate for emissions and support claims of being carbon-neutral or achieving net zero. Offsets can be generated from various projects, from forest protection to carbon removal technologies.

Estimates of the size of the carbon offsets market in 2024 range from $1 billion to $2 billion, with forecasts projecting growth to as much as $250 billion by 2050. However, demand has stalled since 2021 following a series of scandals. Many projects were found to be overstating their impact. For example, Apple faces a lawsuit over its “carbon-neutral” Apple Watch, which critics say relied on questionable projects. To mitigate these risks, buyers are adopting tighter quality controls such as carbon ratings, avoiding certain project types, and prioritizing removal over avoidance offsets. These practices are reshaping market pricing. Project developers must invest in transparency and monitoring technology to build buyer trust.

Scope

• This report provides an overview of carbon offsets, a major topic within the ESG theme.
• It includes a comprehensive introduction to carbon offsets and how they are used to offset carbon emissions.
• It includes a guide to corporate offset strategies and advice on how companies should approach carbon offsets, along with the analyst’s carbon offsets value chain. This has four segments: project developers, carbon validators, intermediaries, and end-users.
• Also included is an overview of the carbon offsetting strategies of large companies across six sectors: consumer, energy, financials, healthcare, industrials, and tech, media, and telecom.

Reasons to Buy

• The carbon offset market experienced rapid growth in the five years following the 2015 Paris Agreement, which spurred both countries and companies to take climate action. Between 2015 and 2020, the number of offsets issued climbed by 236% from 67 million in 2015 to 223 million in 2020, while the number retired by companies rose by 303% from 41 million in 2015 to 166 million in 2020. The market then began to plateau. Credit retirements have hovered between 165 million and 190 million from 2020 to 2024. Doubts over offset quality have contributed to the market’s stagnation, but have also not led to any significant decline.
• This report will help you understand more about carbon offsets and provide guidance on how to incorporate them into your net-zero strategy.