Emissions trading, also known as cap and trade, is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It allows regulated entities to trade emission allowances allocated within an overall emissions cap set by regulators. Industries such as power plants, oil refineries, commercial aircraft, and factories use emissions trading to comply with state, national, and international emissions caps.
The global Emissions Trading Market is estimated to be valued at US$ 334.8 Bn in 2023 and is expected to exhibit a CAGR of 6.8% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
Governments and regulatory bodies across the globe are implementing stringent policies and regulations to effectively reduce carbon emissions and limit global warming. Emissions trading provides a cost-effective way for industries and companies to cut emissions while still being able to operate profitably. The growing emphasis on lowering greenhouse gas emissions to meet commitments under the Paris Agreement presents a major opportunity for the emissions trading market. As governments enhance commitments and set more ambitious targets to curb emissions, the demand for emissions allowances is likely to increase significantly. This will drive revenues and foster greater adoption of emissions trading programs worldwide over the coming years.
Porter's Analysis
Threat of new entrants: The emissions trading market has moderate threat of new entrants owing to high capital requirements to enter this market and establish distribution channels.
Bargaining power of buyers: The bargaining power of buyers is moderate as there are no substitutes for emissions allowances and credits. Buyers have to comply with government regulations.
Bargaining power of suppliers: The bargaining power of suppliers is moderate as the emissions market has a large number of small suppliers and buyers can switch between suppliers.
Threat of new substitutes: The threat of new substitutes is low as emissions trading is currently the most viable approach for reducing carbon emissions. Alternatives are still in development stages.
Competitive rivalry: The competitive rivalry is high due to large number of emissions trading platforms and brokers competing for market share.
SWOT Analysis
Strength: It offers cost-effective compliance with regulations. Trading allows companies flexibility to pollute. The market provides incentives to reduce greenhouse gas emissions.
Weakness: Over-allocation of allowances can undermine emissions reductions. Market is subject to macroeconomic fluctuations affecting prices. Complex regulations differ across jurisdictions.
Opportunity: Development of offset programs in other sectors like forestry and waste can boost market size. Linking of regional trading schemes can increase trading volume.
Threats: Stricter climate policies can decrease demand for allowances and credits. Economic slowdowns threaten demand for emissions allowances and credits.
Key Takeaways
The Global Emissions Trading Market Share is expected to witness high growth over the forecast period of 2023 to 2030. The market size for 2024 is estimated to be US$ 334.8 Bn growing at a CAGR of 6.8%.
Regional analysis indicates Europe dominates the market with over 50% share driven by stringent EU Emissions Trading System (EU ETS). The EU ETS is the largest emissions trading scheme in the world and has helped the region transition to a greener economy. Asia Pacific is expected to be the fastest growing regional market led by China establishing nationwide carbon trading and pilot trading schemes in several provinces.
Key players operating in the emissions trading market are Johnson & Johnson Services, Inc., 3M, BASF SE, Shell plc, Chevron Corporation, Berkshire Hathaway Inc, Enel SpA, General Electric, National Australian Bank, Duke Energy. Shell is one of the largest players due to its involvement since the start of EU ETS and global operations across various sectors. 3M is also a major supplier of emissions abatement and monitoring technologies.
For more insights, Read- https://www.pressreleasebulletin.com/emissions-trading-market-trends-size-and-share-analysis/
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