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 emissions of pollutants. Emissions allowances which are allocated or auctioned by regulatory authorities can be traded, providing flexibility to regulated sources of pollution. The trading of allowances and offsets provides incentives for achieving reductions wherever they cost the least. Industries and businesses regulated by emissions trading schemes purchase allowances from those who have avoided higher than allocated emissions. The global emissions trading market includes trading of carbon and other greenhouse gas emissions to meet targeted reductions.
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 5.8% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity
Stringent regulations aimed at reducing carbon emissions present a major market opportunity for the emissions trading market. The UN Paris Agreement and national emission reduction targets require substantial cuts in greenhouse gas emissions across industries. Emissions trading provides a cost-effective mechanism to achieve these targets. The market opportunity lies in facilitating emissions trading across a widening set of industries and geographies to meet increasingly stringent climate change commitments. This will drive demand for emissions allowances and offset credits over the forecast period.
Porter's Analysis
Threat of new entrants: Low barriers to enter the emissions trading market such as low capital requirements could attract new players. However, stringent government regulations and dominance of existing players make entry difficult.
Bargaining power of buyers: Large industry players and governments are major buyers in this market. Their strong bargaining power keeps the prices of emission allowances and offsets competitive.
Bargaining power of suppliers: A few global commodity exchanges control the supply of emission allowances and offset credits. However, options for compliance also come from renewable projects, making the supplier power balance.
Threat of new substitutes: No close substitutes exist for emissions trading as it is currently the most viable way to comply with emissions reduction targets set by governments and regulators.
Competitive rivalry: Intense competition exists among existing players due to low product differentiation. Players focus on expanding their project portfolios and regional presence to gain market share.
SWOT Analysis
Strengths: Emissions trading enables cost-effective compliance with regulations. It offers flexibility to industries in timing emission reductions.
Weaknesses: Market is prone to volatility due to macroeconomic and political factors. Additional costs are involved in monitoring and verification.
Opportunities: Growing focus on climate change globally is increasing demand. New offset project types and linking of disparate carbon markets present opportunities.
Threats: Changes in government priorities and regulations pose risks. Economic slowdowns threaten demand for allowances and credits.
Key Takeaways
The Global Emissions Trading Market Size is expected to witness high growth during the forecast period due to stringent government regulations and the Paris Agreement commitments.
Regional Analysis: The Asia Pacific region is anticipated to grow at the fastest pace owing to the emerging carbon markets in China, Korea, and other countries. The growth in this region is driven by the increase in investments in renewable energy to replace coal-fired power in countries like China and India.
Key players operating in the emissions trading market are Medtronic plc, Stryker Corporation, Brainlab AG, B. Braun Melsungen AG, Scopis GmbH, Fiagon AG, Karl Storz GmbH & Co. KG, Amplitude Surgical, Zimmer Biomet Holdings, Inc., and Siemens Healthineers. Major players are focusing on strategic partnerships and collaborations with offset project developers and regional regulatory bodies to expand their carbon credit portfolios globally.
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https://www.newswirestats.com/emissions-trading-market-size-share-growth-outlook-2023/
