Canada's Carbon Credit Market Is Driven By Stringent Government Regulations

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The Canada carbon credit market is experiencing significant growth owing to stringent regulations imposed by the government to lower greenhouse gas emissions. Carbon credits, also known as carbon offsets, allow high emitting industries and individuals to compensate for their own emissions by purchasing verified emission reductions from other organizations such as renewable energy projects. The credits are tradable permits that represent the right to emit one ton of carbon dioxide or the mass of another greenhouse gas. Firms require carbon credits to legally emit carbon and offset their emissions. The Global Canada carbon credit market is estimated to be valued at US$ 1,797.7 Mn in 2024 and is expected to exhibit a CAGR of 11% over the forecast period 2024-2031.
Key Takeaways
Key players operating in the Canada carbon credit market are WGL Holdings, Inc., Enking International, Green Mountain Energy, Native Energy, Cool Effect, Inc., Sustainable Travel International, 3 Degrees, Terrapass, and Sterling Planet, Inc. These players are focusing on obtaining credits through afforestation projects, renewable energy projects, ...
... and energy efficiency projects to cater to the rising demand for carbon offsets in various industries.
The demand for carbon credits is growing significantly owing to stringent government mandates to curb pollution levels and achieve net-zero emission targets well before 2050. Various industries are increasingly relying on purchasing carbon credits to meet their compliance needs under the existing emission trading schemes. Carbon offsets are emerging as a cost-effective solution to lower the carbon footprint of energy-intensive industries.
The Canada carbon credit market is also witnessing substantial expansion across international markets. Canada-based firms are exporting carbon credits to countries with cap-and-trade programs by undertaking projects that mitigate greenhouse gas emissions abroad. Key players are collaborating with international organizations working on emissions reduction initiatives to tap growth opportunities around the globe.
Market Drivers
Stringent regulations around carbon emissions are the primary driver propelling the Canada carbon credit market. The federal government has implemented a nation-wide price on carbon that will gradually increase from $30 per tonne in 2022 to $170 per tonne by 2030. This makes carbon credits an essential compliance instrument for firms. The rising carbon price is anticipated to significantly drive up demand for offsets to meet compliance needs at lower costs. Firms from energy, transportation and industrial sectors will need to increasingly rely on carbon credits to balance their emissions budgets and avoid penalties. This will continue supporting the growth of Canada's carbon credit industry over the coming years.
Current Geopolitical Situation And Its Impact On Canada Carbon Credit Market Growth
The Canada carbon credit market is facing challenges due to the ongoing geopolitical tensions and environmental policy changes across the world. The Russia-Ukraine conflict has disrupted the global supply chains and energy markets. This has put pressures on organizations to cut down carbon emissions in a cost-effective manner. Further, countries like the USA are reconsidering climate policies with the change in administration. This political uncertainty is hampering investments in emission reduction projects.
However, the Canada government remains committed to its climate goals under the Paris Agreement. The implementation of federal carbon pricing backstop and Clean Fuel Standard is driving compliance demand. Nevertheless, fluctuating crude oil prices directly impact the business models of high emissions industries. They face difficulties in passing carbon costs to customers amid an economic slowdown. The market needs supportive policies for credit financing and development of new offsetting protocols. Expanding bilateral trading agreements can enhance liquidity. Technology innovation and nature-based solutions will be central to building resiliency against geopolitical risks in the long-run.
Regions Of Concentrated Market Value
Within Canada, the provinces of Alberta, Saskatchewan, Ontario, and Quebec account for over 85% of the carbon credit market value. This is due to the high concentration of oil & gas production, electricity generation, mining and manufacturing industries within these regions. Alberta alone contributes to nearly 50% of the national emissions. The implementation of the federal Output-Based Pricing System (OBPS) has accelerated compliance demand from large industrial facilities located here. Provinces like British Columbia with legislated carbon pricing in place since 2008 also have well established offset programs.
Fastest Growing Regional Market
The Canadian Prairie provinces, particularly Saskatchewan and Manitoba, are expected to witness strongest growth in the upcoming years. This is attributed to the rising emissions from agriculture, which accounts for over 10% of the national total. Farmers are adopting carbon offsetting and soil sequestration projects to balance their carbon footprint. The provincial governments are supporting this transition through incentives and capacity building initiatives. The development of protocols for quantification and verification of carbon removals in agricultural lands offers new opportunities. This will drive the Prairies to emerge as the fastest growing regional market segment through 2031.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it

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What Are The Key Data Covered In This Canada Carbon Credit Market Report?
:- Market CAGR throughout the predicted period
:- Comprehensive information on the aspects that will drive the Canada Carbon Credit 's growth between 2024 and 2031.
:- Accurate calculation of the size of the Canada Carbon Credit and its contribution to the market, with emphasis on the parent market
:- Realistic forecasts of future trends and changes in consumer behaviour
:- Canada Carbon Credit Industry Growth in North America, APAC, Europe, South America, the Middle East, and Africa
:- A complete examination of the market's competitive landscape, as well as extensive information on vendors
:- Detailed examination of the factors that will impede the expansion of Canada Carbon Credit vendors
FAQ’s
Q.1 What are the main factors influencing the Canada Carbon Credit ?
Q.2 Which companies are the major sources in this industry?
Q.3 What are the market’s opportunities, risks, and general structure?
Q.4 Which of the top Canada Carbon Credit companies compare in terms of sales, revenue, and prices?
Q.5 Which businesses serve as the Canada Carbon Credit ’s distributors, traders, and dealers?
Q.6 How are market types and applications and deals, revenue, and value explored?
Q.7 What does a business area’s assessment of agreements, income, and value implicate?