by Emissions trading or cap and trade is an environmental policy tool used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It allows organizations that can reduce emissions at a lower cost to benefit financially. In an emissions trading scheme, governments establish a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued tradable emissions permits which represent the right to emit a specific amount. Individuals or companies that need to increase their emissions must buy permits from those who require fewer allowances either because they have installed more effective pollution control equipment or have improved production processes. This allows the market to find the lowest-cost opportunities for reducing emissions.
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 key trends:
One of the major trends in the emissions trading market is the implementation of increasingly stringent government regulations and policies around the world to reduce carbon emissions and combat climate change. The adoption of international agreements such as the Paris Agreement have led many countries to set ambitious national targets for carbon reduction and implement carbon pricing mechanisms such as carbon taxes and emissions trading schemes. For example, China launched its national emissions trading scheme in 2021 covering thousands of heavy industrial companies. The implementation of more robust carbon pricing and emissions caps is expected to drive greater demand for emissions permits and boost market growth over the forecast period.
Porter’s Analysis
Threat of new entrants: Moderate threat level as emissions trading involves high initial costs for setting up infrastructure and gaining recognition.
Bargaining power of buyers: High bargaining power due to large buyers like governments and corporations having negotiating power over prices.
Bargaining power of suppliers: Moderate power level with few large suppliers globally dictating market.
Threat of new substitutes: Low threat as emissions trading remains one of the primary means for complying with emissions regulations.
Competitive rivalry: Fierce competition exists between existing players to gain greater market share.
Key Takeaways
The Global Emissions Trading Market Share is expected to witness high growth. 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.
Regional analysis comprises The Europe region currently dominates the market owing to stringent environmental regulations. The Asia Pacific region is estimated to be the fastest growing market owing to rapid industrialization and growing focus on renewable energy adoption. Countries like China and India are implementing nationwide cap-and-trade programs to curb their emissions.
Key players related content comprises Key players operating in the Emissions Trading Market are Johnson & Johnson Services, Inc. Emissions trading platforms/brokers are focusing on expanding to emerging markets and diversifying their service offerings.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
