Wood Mackenzie predicted that global carbon markets are poised for transformative growth, with two key strategic areas emerging as critical components of global decarbonisation efforts. The research firm’s long-term outlook reports forecasted substantial market size growth in Carbon Capture, Utilisation and Storage (CCUS) and carbon offsets, surpassing trillions of dollars in value by mid-century.
Wood Mackenzie’s Carbon Markets and CCUS research teams projected that rising demand, policy evolution, strategic corporate deals, and technological advancements would fuel steep growth trajectories for both sectors. The analysis indicated that navigating ecosystem hurdles would be key to seizing the opportunity over the next 25 years.
Hetal Gandhi, lead – global forecasts and APAC research at Wood Mackenzie, explained that CCUS would likely become crucial for abating process emissions in hard-to-abate industries. The company’s analysis revealed global capture capacity expanding 28-fold to 2,061 Mtpa by 2050, with similar growth expected in storage. Gandhi noted that CCUS had established its space in key stakeholders’ minds, leading to $1.2 trillion of investment in point-source emissions alone.
Peter Albin, senior research analyst of Carbon Markets at Wood Mackenzie, added that the carbon offsets market would mature, with improved standards driving demand for flexible mitigation options. The firm projected the carbon offset market would exceed $150 billion, with the synergy between carbon offsets and CCUS playing an increasingly sizeable role in climate strategies.
The reports identified several key findings regarding market dynamics. Decarbonisation demand was expected to outpace supply growth, driven by corporate sustainability pledges, tightening regulations and hard-to-abate sector needs creating unprecedented demand for emissions reduction solutions. Energy producers and heavy industry were leading this charge, exploring cutting-edge technologies to slash carbon footprints. As these sectors balanced operational needs with environmental responsibilities, potential supply bottlenecks loomed, reshaping industry landscapes with innovative strategies emerging to achieve deep emissions cuts.
Gandhi’s analysis revealed diverse CCUS adoption drivers and unique opportunities across various sectors. Blue hydrogen was expected to lead growth until 2035, outcompeting green alternatives on cost, while energy security would boost upstream adoption, with pre-combustion’s affordability supporting global gas demand. Young coal power and steel plants were projected to drive uptake in Asia Pacific despite high costs, while cement and refining would invest in CCUS due to high process emissions and limited alternatives.
The research showed that net zero targets were driving dual decarbonisation strategies, with companies increasingly integrating carbon offsets and CCUS technologies to meet ambitious climate goals. This approach addressed carbon footprints comprehensively, with CCUS advancements scaling up future efforts while carbon offsets provided flexibility and immediate practicality, particularly for hard-to-abate or unavoidable emissions.
Albin noted that long-term demand for carbon removal was essential for meeting net zero targets, but avoidance and reduction offsets would play a crucial role in compensating for scope 3 emissions as companies grappled with supply chain decarbonisation complexities.
The analysis highlighted a dynamic ecosystem benefiting both markets, with government policies, particularly incentives and compliance carbon pricing regimes, catalysing synergy between CCUS and carbon offset markets. Emphasis on additionality, permanence and verifiability was raising standards across sectors, with growing standardisation needs bolstering trust in authentic emission mitigation strategies. This evolution was creating a cohesive framework for climate action, spanning technological and nature-based solutions.
Michelle Uriarte-Ruiz, senior research analyst at Wood Mackenzie, stated that the carbon offset market would grow remarkably, with volumes expanding sixfold by 2050. Carbon removal was expected to make up over 40% of offsets by mid-century, signalling a pivotal shift in climate strategies. This blend of solutions would forge a more resilient carbon value chain, potentially accelerating global decarbonisation efforts.
The research projected significant growth in prices and investment, with the average carbon offset price expected to increase more than fivefold by 2050. CCUS investments were forecast to reach at least $1.2 trillion, fuelled by point-source capacities and carbon removal value chain additions. These trends highlighted rapid expansion and increasing interconnectedness of both markets, reshaping corporate sustainability strategies and offering businesses a comprehensive toolkit for addressing carbon footprints.
Albin emphasized that sustainable deep decarbonisation technologies relied on robust carbon markets to gain widespread adoption, with rising carbon offset prices boosting CCUS sector viability, reducing reliance on government support, and driving rapid adoption post-2035.
Mhairidh Evans, Vice President, Global Head of CCUS research at Wood Mackenzie, concluded that the carbon offset and CCUS markets were on the cusp of a transformative era. The growth, driven by net zero ambitions, offered immense opportunities for early movers, though success hinged on navigating policy uncertainties and infrastructure challenges. As these markets matured, they would become cornerstone elements of global climate strategies, reshaping the energy transition landscape.
Wood Mackenzie cautioned that realising the full potential of these markets faced near-term hurdles, including enhancing offset quality, defining clear use cases, securing government support, and scaling carbon removal technologies. Both sectors required rapid policy evolution, with CCUS particularly needing continued government financial backing for at least the next decade. These challenges underscored the complexity of the evolving carbon management landscape and its critical role in global decarbonisation efforts.
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