Emission Trading System - Europe

Europe

The government income in the Emission Trading System market is projected to reach €17,370.00m in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 2.02% resulting in a projected total amount of €19,200.00m by 2029.
From a global comparison perspective it is shown that the highest government income is reached in Germany (€11,550.00m in 2024).
In the Emission Trading System market, the number of contracts is expected to amount to 26 by 2029.

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Analyst Opinion

The Emission Trading System market in Europe is witnessing significant growth and evolution in recent years. Customer preferences in the European Emission Trading System market are shifting towards more sustainable and environmentally friendly investment options.

Investors are increasingly looking for opportunities that align with ESG (Environmental, Social, and Governance) criteria, driving demand for emission allowances and carbon credits. Trends in the market indicate a growing interest from financial institutions and large corporations in participating in emissions trading. This trend is fueled by regulatory developments that encourage companies to reduce their carbon footprint and comply with emission reduction targets set by the European Union.

Local special circumstances in Europe, such as the EU Emissions Trading System (EU ETS) being one of the largest cap-and-trade systems globally, play a crucial role in shaping the market dynamics. The EU ETS covers various sectors, including power generation, aviation, and manufacturing, creating a diverse and liquid market for emission allowances. Underlying macroeconomic factors, such as the push towards a carbon-neutral economy and the increasing focus on sustainability, are driving the growth of the Emission Trading System market in Europe.

As countries in the region commit to ambitious climate goals, the demand for emission allowances is expected to rise, further fueling the development of the market.

Methodology

Data coverage:

Figures are based on commodity derivatives, their notional value, the number of contracts traded, the open interest (outstanding contracts at the end of a year), and the average value of a contract.

Modeling approach / Market size:

Market sizes are determined by a Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data of World Bank, as well as the World Federation of Exchanges. Furthermore, we use relevant key market indicators and data from country-specific associations and national data bureaus such as GDP, wealth per capita, and the online banking penetration rate. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are GDP per capita an the online banking penetration rate.

Additional Notes:

The market is updated twice per year in case market dynamics change.