Global Carbon Dioxide Market Grows at a Staggering CAGR of 12.3%

Introduction

The global carbon dioxide market consists of methods and systems that enable trading of carbon credits and allowances to reduce greenhouse gas emissions.  This market encompasses compliance-based systems such as the European Union Emissions Trading System (EU ETS) and voluntary carbon markets (VCMs), where companies acquire carbon offsets to mitigate emissions.  Carbon credits signify reducing or removing one metric ton of CO₂ or its equivalent in other greenhouse gases.  These credits are produced by many programs, encompassing renewable energy initiatives, forestry, and carbon capture and storage (CCS) technology.  The market aims to offer economic incentives for emission reduction and promote sustainable practices across many businesses.

The expansion of the carbon dioxide market is driven by multiple reasons.  The growing worldwide dedication to attaining net-zero emissions drives governments and corporations to implement carbon pricing strategies and engage in carbon offset initiatives.  Implementing rules such as the EU's Carbon Border Adjustment Mechanism (CBAM) stimulates the demand for verified carbon credits to circumvent trade sanctions.  Technological innovations in carbon capture, utilisation, and storage (CCUS) and direct air capture (DAC) are augmenting the industry's supply side.  Moreover, initiatives such as the Carbon Data Open Protocol (CDOP) and revisions to the Science Based Targets (SBTi) guidelines improve transparency and credibility in carbon accounting.  These advancements promote heightened engagement and investment in carbon markets, illustrating a wider trend of incorporating environmental factors into economic decision-making.

Market Dynamics

 Incorporation of carbon pricing frameworks drives market growth

Implementing carbon pricing mechanisms is essential for expanding the global carbon dioxide market.  Global governments are enacting laws that impose a cost on carbon emissions, encouraging reductions and creating a demand for carbon credits.  The European Union's Emissions Trading System (EU ETS) has reduced emissions by 5% in 2024, consistent with its 2030 objective of a 62% reduction from 2005 levels.

• The Australian Energy Markets Commission (AEMC) advocates for a carbon pricing commencing at $70 per tonne in 2024, increasing to $420 per tonne by 2050 to attain net-zero emissions.  These pricing schemes are crucial for stimulating investments in low-carbon technologies and activities.

These initiatives highlight a worldwide movement to integrate carbon pricing into economic frameworks, fostering the development and complexity of carbon markets.

Innovative carbon capture methods and initiatives create tremendous opportunities

Progress in carbon capture technologies offers substantial prospects for the carbon dioxide market.  Climeworks and Deep Sky are leading the development of direct air capture (DAC) systems that remove CO₂ from the atmosphere for permanent sequestration.

• Climeworks' Mammoth plant in Iceland, operational since May 2024, can capture up to 36,000 tons of CO₂ annually, utilising geothermal energy. Likewise, Deep Sky is establishing carbon capture campuses in Canada, each anticipated to sequester 200,000–300,000 tons of CO₂ annually through in-situ mineralisation.

These initiatives facilitate emission reduction objectives and produce premium carbon credits, drawing investments from companies seeking to mitigate their carbon footprints.   The scalability and technology advancements in carbon capture and storage (CCS) provide a solution to fulfil the growing demand for carbon offsets, especially from difficult-to-decarbonise sectors.  As legislative frameworks develop to facilitate CCS initiatives, these technologies are set to assume a crucial role in the growth and diversity of the carbon dioxide market.

Regional Analysis

North America is at the forefront of the global carbon dioxide market owing to its substantial industrial foundation, developed carbon capture infrastructure, and advanced regulatory systems.  The United States leads with the Department of Energy allocating USD 3.5 billion to four regional Direct Air Capture (DAC) hubs announced in 2024, each intended to capture more than 1 million metric tons of CO₂ per year.  Climeworks and CarbonCapture Inc. are establishing plants in Texas and Louisiana, utilising federal assistance via the 45Q tax credit.  The advancements and the rise of voluntary carbon markets and business net-zero commitments highlight North America's dominance in CO₂ supply and sequestration capabilities.

Key Highlights

• The global carbon dioxide (CO₂) market size was valued at USD 77.7 billion in 2024 and is projected to grow from USD 87.3 billion in 2025, reaching USD 217.8 billion by 2033, exhibiting a CAGR of 12.3% during the forecast period (2025–2033).
• By Source, the market is segmented into industrial sources, natural sources, andbio-based sources. Industrial sources dominate the market share.
• By Application, the market is segmented into Enhanced Oil Recovery (EOR), food & beverage industry, medical applications, fire suppression, welding and metal fabrication, carbonated beverages, agriculture (Greenhouses), andchemical synthesis. Enhanced Oil Recovery (EOR) is the leading application.
• By End-Use Industry, the market is segmented into oil & gas, food & beverage, healthcare, metals & mining, chemicals, agriculture, andelectronics. Food and beverage hold the largest share.
• Based on region, the global market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. North America dominates the global market.

Competitive Players

1. Linde plc
2. Air Liquide
3. Air Products and Chemicals, Inc.
4. Messer Group
5. Taiyo Nippon Sanso Corporation
6. India Glycols Limited
7. Gulf Cryo
8. SOL Group
9. Acail Gas
10. Ellenbarrie Industrial Gases
11. Dubai Industrial Gas
12. Buzwair Industrial Gases Factories

Recent Developments

• In January 2025, through its subsidiary 1PointFive, Occidental is constructing the STRATOS Direct Air Capture (DAC) facility in Texas, designed to capture 500,000 metric tons of CO₂ annually. The captured CO₂ will be utilised for enhanced oil recovery and stored underground, contributing to net-negative emissions.

Segmentation

1. By Source
   1. Industrial Sources
   2. Natural Sources
   3. Bio-based Sources
2. By Application
   1. Enhanced Oil Recovery (EOR)
   2. Food & Beverage Industry
   3. Medical Applications
   4. Fire Suppression
   5. Welding and Metal Fabrication
   6. Carbonated Beverages
   7. Agriculture (Greenhouses)
   8. Chemical Synthesis
3. By End-Use Industry
   1. Oil & Gas
   2. Food & Beverage
   3. Healthcare
   4. Metals & Mining
   5. Chemicals
   6. Agriculture
   7. Electronics
4. By Region
   1. North America
   2. Europe
   3. Asia-Pacific
   4. Latin America
   5. The Middle East and Africa