Canada Carbon Credit Market SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024 - 2031)

Canada Carbon Credit Market is Segmented By Sector (Energy, Transportation, Residential and Commercial Buildings, Industrial, Agriculture, Forestry, Water and Wastewater). The report offers the value (in USD million) for the above-mentioned segments.

Canada Carbon Credit Market Size

Market Size in USD Mn

CAGR11.2%

Study Period2024 - 2031
Base Year of Estimation2023
CAGR11.2%
Market ConcentrationMedium
Major PlayersWGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc. and Among Others.
*Disclaimer: Major players are listed in no particular order.
*Source: Coherent Market Insights
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Canada Carbon Credit Market Analysis

The Canada Carbon Credit Market is estimated to be valued at USD 1,797.7 Mn in 2024 and is expected to reach USD 3,365.2 Mn by 2031, growing at a compound annual growth rate (CAGR) of 11.2% from 2024 to 2031.

The market is driven by the Canada's commitment to reduce greenhouse gas emissions and meet its Paris Agreement targets through carbon pricing schemes and emissions trading systems.

Canada Carbon Credit Market Trends

Market Driver - Increasing Global Warming in Canada Market

The increasing concerns about global warming across Canada has fueled the growth of the carbon credit market in the country. With rising temperatures causing hazards like wildfires and floods, the Canadian government has been actively pushing initiatives to lower carbon emissions through regulations and carbon pricing programs. This is driving more organizations to explore options to offset their carbon footprint and become neutralized. Carbon credits have emerged as an effective way to not just compensate for greenhouse gas emissions but also support green technology projects.

Many large Canadian corporations have committed to net-zero emission targets over the next couple of decades in line with the national goal of reducing emissions by 40–45% below 2005 levels by 2030. This is increasing the demand for credible carbon offsets. As per Natural Resources Canada, between 2018–2019, over 30 million tons of carbon offsets were purchased through provincial programs like the Alberta Emissions Offset System and Quebec Cap-and-Trade system. This trend is anticipated to continue rising strong given the climate targets.

Market Driver – Increasing International Commitments

The increasing international commitments by Canada to reduce greenhouse gas emissions is a major driving factor behind the growth of carbon credit market in the country. Canada has pledged to reduce its emissions by 40-45% by 2030 from the 2005 levels under the Paris Agreement. It has also joined collaborative initiatives like Powering Past Coal Alliance and Net Zero Electricity Alliance to transition away from fossil fuels. In order to meet these ambitious climate targets, carbon pricing and cap-and-trade programs have been introduced that are incentivizing Canadian companies to lower their carbon footprint. This has led to a rise in demand for carbon credits as they provide a flexible and cost-effective way to offset hard-to-abate emissions.

As per the data from Environment and Climate Change Canada, the overall carbon pricing in Canada is expected to increase from $50 per ton of CO2e in 2022 to $170 per ton by 2030. This significant rise in carbon prices is attracting many large emitters to invest in offset projects for crediting greenhouse gas reductions or removals.

Canada Carbon Credit Market Key Factors

Market Challenge – Lack of Global Standardization in the Carbon Credit Market

Lack of global standardization in the carbon credit market is a major factor restraining the growth of Canada's carbon credit market. With different countries having divergent rules and methodologies for generating, trading and accounting of carbon credits, it has become increasingly complex for Canadian companies and market participants.

Canada currently adheres to compliance protocols established by the Kyoto Protocol and Paris Agreement for generating credits from initiatives such as forestry projects, renewable energy installations etc. However, other large emitter nations such as USA, China and India have established their own domestic carbon trading platforms which follow unique rules and guidelines. For example, the compliance carbon market in China operates quite differently from the Canadian system in terms of eligible project types, credit vintage rules, accounting and more.

This lack of uniformity has made carbon credits generated in one region incompatible and non-tradable in other compliance regimes. Canadian companies now have to navigate a maze of different infrastructure and compliance norms before engaging in international trade of credits. This increases transaction costs and administrative hurdles, discouraging larger companies from fully participating in the carbon market.

Market Opportunity – Increasing Investment in Carbon Credit Market

Investing more in carbon credit markets in Canada has the potential to provide significant environmental and economic benefits. As climate change threatens the country, investing in projects and technologies that reduce greenhouse gas emissions is crucial. The carbon credit market allows companies and governments to finance emission-reduction projects via the sale and purchase of credits representing tons of carbon dioxide removed from the atmosphere. When more funds are put into this market, it enables larger scales of projects that remove or offset greater amounts of emissions.

More investment will support more projects across many sectors. For example, increased financing could lead to expansion of forest conservation and reforestation initiatives. According to data from Environment and Climate Change Canada, forests currently sequester over 8% of Canada's annual emissions. Larger projects protecting and expanding forest cover will therefore offset a substantial portion of Canada's climate pollution. Renewable energy is another sector that can grow with more carbon credit funding. Transitioning away from fossil fuels and investing in wind, solar and other clean power reduces long-term emissions. 

Segmental Analysis of Canada Carbon Credit Market

Insights, By Sector: Decarbonization Policies and Renewable Expansion

In terms of sector, energy sub-segment contributes the highest share of 24.6% in the market, owing to decarbonization policies and renewable expansion

Canada has committed to achieve net-zero greenhouse gas emissions by 2050, which has accelerated carbon reduction programs targeting the energy sector. Various policies including carbon tax, clean fuel standards, coal plant phase outs have been effective in curbing emissions from electricity generation and fuel consumption.

Moreover, provincial renewable portfolio standards requiring a certain percentage of electricity coming from green sources have boosted investments in wind and solar energy sources. Provinces like Ontario, Quebec and Alberta are world leaders in renewable capacity addition. This accelerated transition away from fossil fuels towards cleaner energy production is a key driver responsible for the energy sector's high demand for carbon credits. As utilities retire coal and natural gas plants ahead of schedule and scale up their renewable energy capacity, it leads to significant emission reductions qualifying for carbon credits.

Adoption of clean technologies like carbon capture and storage as well as nuclear power expansion have also helped the energy sector make substantive emission cuts eligible for carbon credits. Though carbon intensive in nature, oil and gas production remains a necessity for meeting Canada's energy needs.

Canada Carbon Credit Market By Sector

Competitive overview of Canada Carbon Credit Market

The major players operating in the Canada Carbon Credit Market include WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Sustainable Travel International, 3 Degrees, Terrapass, and Sterling Planet, Inc.

Canada Carbon Credit Market Leaders

  • WGL Holdings, Inc.
  • Enking International
  • Green Mountain Energy
  • Native Energy
  • Cool Effect, Inc.
*Disclaimer: Major players are listed in no particular order.

Canada Carbon Credit Market - Competitive Rivalry, 2023

Market Concentration Graph

Canada Carbon Credit Market

Market Consolidated
(Dominated by major players)
Market Fragmented
(Highly competitive with lots of players.)
*Source: Coherent Market Insights

Recent Developments in Canada Carbon Credit Market

  • In March, EnKing International won a bid for selling Methane Credits to Pilot Auction Facility (PAF) of The World Bank Group.
  • In November, EnKing International announced that the company is an approved Energy Service Company (ESCO) from Bureau of Energy Efficiency (BEE), India.

Canada Carbon Credit Market Report - Table of Contents

  1. RESEARCH OBJECTIVES AND ASSUMPTIONS
    • Research Objectives
    • Assumptions
    • Abbreviations
  2. MARKET PURVIEW
    • Report Description
      • Market Definition and Scope
    • Executive Summary
      • Canada Carbon Credit Market, By Sector
    • Coherent Opportunity Map (COM)
  3. MARKET DYNAMICS, REGULATIONS, AND TRENDS ANALYSIS
    • Market Dynamics
    • Impact Analysis
    • Key Highlights
    • Regulatory Scenario
    • Product Launches/Approvals
    • PEST Analysis
    • PORTER’s Analysis
    • Merger and Acquisition Scenario
  4. Canada Carbon Credit Market – IMPACT OF CORONAVIRUS (COVID-19) PANDEMIC
    • COVID-19 Epidemiology
    • Supply Side and Demand Side Analysis
    • Economic Impact
  5. Canada Carbon Credit Market, By Sector, 2024-2031, (USD Mn)
    • Introduction
      • Market Share Analysis, 2024 and 2031 (%)
      • Y-o-Y Growth Analysis, 2019 - 2031
      • Segment Trends
    • Energy
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
    • Transportation
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
    • Residential and Commercial Buildings
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
    • Industrial
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
    • Agriculture
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
    • Forestry
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
    • Water and Wastewater
      • Introduction
      • Market Size and Forecast, and Y-o-Y Growth, 2019-2031, (USD Mn)
  6. COMPETITIVE LANDSCAPE
    • WGL Holdings, Inc.
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Enking International
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Green Mountain Energy
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Native Energy
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Cool Effect, Inc.
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Sustainable Travel International
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • 3 Degrees
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Terrapass
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Sterling Planet, Inc.
      • Company Highlights
      • Product Portfolio
      • Key Developments
      • Financial Performance
      • Strategies
    • Analyst Views
  7. SECTION
    • Research Methodology
    • About us

Canada Carbon Credit Market Segmentation

  • By Sector
    • Energy
    • Transportation
    • Residential and Commercial Buildings
    • Industrial
    • Agriculture
    • Forestry
    • Water and Wastewater
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Frequently Asked Questions :

What are the key factors hampering the growth of the Canada Carbon Credit Market?

The lack of global standardization in the carbon credit market is a major factor hampering the growth of the Canada Carbon Credit Market.

What are the major factors driving the Canada Carbon Credit Market growth?

Which is the leading Sector in the Canada Carbon Credit Market?

Which are the major players operating in the Canada Carbon Credit Market?

What will be the CAGR of the Canada Carbon Credit Market?