Market Overview
The Latin America carbon credit market size reached USD 46.9 Billion in 2024 and is projected to reach USD 823.8 Billion by 2033. The market is expected to grow at a CAGR of 33.2% during the forecast period 2025-2033. Growth is driven by legislative frameworks, corporate net-zero pledges, international carbon trading systems, escalating deforestation concerns, and investments in nature-based solutions. Government policies and rising demand for certified carbon offsets further fuel the market.
Study Assumption Years
- Base Year: 2024
- Historical Year/Period: 2019-2024
- Forecast Year/Period: 2025-2033
Latin America Carbon Credit Market Key Takeaways
- The market size stood at USD 46.9 Billion in 2024 with a robust CAGR of 33.2% forecasted during 2025-2033.
- There is a rising demand for large-scale carbon offset agreements, focusing on forestry and land restoration with long-term verified credit purchases.
- Expanding investments in large-scale carbon removal initiatives, especially nature-based solutions, are propelling market growth.
- Financial institutions play a critical role in facilitating these credit transactions aligned with global sustainability targets.
- Latin America is emerging as a major source for high-quality carbon credits backed by regulatory support and corporate sustainability goals.
- Long-term contracts and rising business demand are strengthening reliability and trust in nature-based carbon removal technologies.
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Market Growth Factors
Legislation, corporate net-zero emissions targets and regulatory pressure which push companies to participate in carbon market activities such as carbon credit trading and offsetting schemes are the main growth drivers in the Latin America carbon credit market, along with international carbon trading systems and regulations that support voluntary carbon markets (VCMs). They could help reverse the trend of deforestation as well as unlock investment in nature-based solutions for reducing emissions while preserving biodiversity and supporting local livelihoods.
In the past few years, there has been a move towards multi-year, bulk purchasing of verified credits, mainly from forestry and land restoration projects. These long data contracts guarantee a sustainable and impactful purchase of carbon offsets, as well as the capacity to meet international sustainability goals. Financial institutions can ease these projects and create carbon credits, leading to a higher integrity supply of carbon credits in the region.
The market is also supported by large-scale carbon removals, composed of nature-based and technological carbon removals, a shift to certified carbon removal credits and regulations and corporate commitments for high-integrity carbon removals. Dominated by reforestation, land restoration, and forestry programs that reduce greenhouse gas emissions, increase biodiversity, and benefit local communities, Latin America is a major and trusted producer of carbon offsets.
Market Segmentation
Type Insights:
- Compliance: Covers carbon credit activities governed by regulatory mandates, ensuring adherence to legal emission reduction requirements.
- Voluntary: Represents carbon credit transactions conducted voluntarily by organizations aiming to achieve sustainability goals beyond regulatory requirements.
Project Type Insights:
- Avoidance/Reduction Projects: Initiatives aimed at preventing emissions through activities such as deforestation prevention and emission source mitigation.
- Removal/Sequestration Projects: Focus on capturing and storing carbon, subdivided into:
- Nature-based: Projects leveraging natural processes like reforestation and soil carbon sequestration.
- Technology-based: Utilize engineered solutions to capture and store carbon from the atmosphere.
End-Use Insights:
- Power: Application of carbon credits in power generation sectors to offset emissions.
- Energy: Broader energy sector including renewables and traditional energy with carbon offsetting needs.
- Aviation: Carbon offset solutions tailored for mitigating emissions in the aviation industry.
- Transportation: Use of carbon credits to balance emissions in various transport modalities.
- Buildings: Initiatives to offset emissions from residential and commercial buildings.
- Industrial: Carbon credit application in various industrial processes to manage carbon footprints.
- Others: Encompasses other sectors not specified explicitly, contributing to overall market demand.
Regional Insights
Brazil is a dominant market within Latin America, driven by extensive forestry and land restoration projects supported by legal frameworks and business sustainability goals. The region shows strong growth prospects with sustained investments contributing to the region's positioning as a key provider of high-quality carbon credits. The market displays a growth pattern aligned with the overall Latin America CAGR of 33.2% during the 2025-2033 forecast period.
Recent Developments & News
In September 2024, Meta entered an agreement to purchase up to 3.9 million carbon offset credits from the forestry division of Brazilian investment bank BTG Pactual, with the transaction continuing through 2038. The deal, potentially valued at USD 16 Million, supports Meta's net-zero target by 2030 and stems from BTG Pactual's reforestation efforts involving over 7 million planted seedlings. In June 2024, BTG Pactual Timberland Investment Group (TIG) committed to supply Microsoft with up to 8 Million nature-based carbon reduction credits by 2043 through forestry and restoration programs valued at USD 1 Billion, marking the largest carbon dioxide elimination credit transaction to date.
In February 2025, indigenous and local organizations from Central and South America recommended enhancements to the Architecture for REDD+ Transactions (ART) to promote indigenous rights, informed consent, and equitable benefit-sharing, which could help close a USD 4.1 Trillion nature funding gap by 2050 benefiting communities and environment.
Key Players
- BTG Pactual
- Meta
- Microsoft
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