The Emissions Trading market is estimated to be valued at US$ 334.80 billion in 2023 and is expected to exhibit a CAGR of 24% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
The emissions trading market involves trading of permits that allow emissions of a certain amount of pollutants like carbon dioxide (CO2). The permits are issued by regulatory authorities based on the total volume of emissions allowed. Companies can buy permits if their emissions exceed the free allocation or can sell the surplus permits if their emissions are below the free allocation. This market mechanism aims to reduce greenhouse gas emissions in a cost-effective manner.
Market key trends:
One of the major trends fueling the growth of emissions trading market is increased carbon pricing around the world. Many countries and regions have implemented carbon pricing programs either in the form of carbon taxes or emissions trading schemes. The average global carbon price saw a rapid increase from less than $10 per ton in 2010 to over $100 per ton in 2022. Stringent climate action plans and net-zero emission targets by 2050 adopted by many nations will require large-scale decarbonization of various industries leading to higher demand for emissions permits in the coming years. The European Union Emissions Trading System (EU ETS) continues to dominate the global emissions trading market accounting for over 80% of the total volume traded worldwide.
Porter’s Analysis
Threat of new entrants: The emissions trading market requires high initial capital investments for infrastructure such as carbon capture and storage facilities, lowering the threat of new entrants.
Bargaining power of buyers: Large corporations and industries are the major buyers in this market. Their significant bargaining power is due to the massive costs needed for becoming compliant with carbon regulations.
Bargaining power of suppliers: A few large players dominate the supply side giving them higher bargaining power over prices of carbon credits and allowances.
Threat of new substitutes: No close substitutes exist currently for emissions trading as a cost-effective means to achieve compliance with emissions reduction targets.
Competitive rivalry: Intense competition exists among leading players for market share and new clients.
SWOT Analysis
Strength: Established infrastructure and expertise in carbon markets provide incumbents an edge. Various cost leadership strategies adopted enhance competitiveness.
Weakness: High dependence on policy support and regulatory certainty. Vulnerable to changing political priorities regarding climate change.
Opportunity: Rising carbon prices open avenues for trading higher volumes. Emerging compliance needs in developing nations present a large untapped market.
Threats: Disruptive technologies reducing demand for credits. Geopolitical tensions jeopardizing international cooperation on climate change.
Key Takeaways
The global Emissions Trading Market Share is expected to witness high growth, exhibiting CAGR of 24% over the forecast period, due to increasing stringency of regulations worldwide to meet climate targets. The market size for 2023 is estimated at US$ 334.80 billion.
The European region currently dominates the market due to the mature European Union Emissions Trading System (EU ETS), the largest carbon market globally. However, the Asia Pacific region is projected to be the fastest growing market, led by the evolving carbon regimes in China, South Korea and other emerging economies.
Key players operating in the emissions trading market are BP Plc, Royal Dutch Shell Plc, Total SE, Chevron Corporation, ExxonMobil Corporation, Engie SA, RWE AG, ON SE, Vattenfall AB, Gazprom, Mitsubishi UFJ Financial Group (MUFG), JPMorgan Chase & Co., Goldman Sachs Group, Inc., Citigroup Inc., Barclays PLC. These companies are focusing on expanding their presence in high growth regions through collaborations and acquisitions.
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https://www.newsstatix.com/emissions-trading-market/
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