The focus market for this essay is that for low carbon and environmental goods and services, or LCEGS, as they will be referred to throughout this essay. The global market for LCEGS, which includes both the alternative fuel and waste management sectors, was worth over $5 trillion as early as 2009 according to the Forbes article Tying Executive Pay to Sustainability Performance. According to a report commissioned by the UK Department for Business, Enterprise, and Regulatory Reform, the British LCEGS sector accounted for “£106.5 billion ($169 billion) in 2007/8” which accounts for 3.5% of the total global market, making the LCEGS sector in the UK the world’s sixth largest. The United States, whose LCEGS sector is worth £629 billion ($997 billion), accounts for the largest percentage of the total global market for LCEGS with 21% of the global share.
A number of factors affect the supply and demand for LCEGS. There are multiple factors affecting the demand in the global market for LCEGS. One of the most significant factors driving the demand for LCEGS globally is the growing consumer concern over the effect that the production of the world’s goods and services is having on the environment. Consumers are starting to seek out and embrace products and services that are “green” or created using “green technology”. While these goods are sometimes more expensive for the consumer, this increased cost is offset by the reduction in the social externalities resulting from the production of the “green” goods and services. These “do-gooders” are often able to produce at quantities greater than those of the standard firms at higher prices due to consumer preference for the social benefits these “good” goods and services provide. (See Diagram 1)
Another factor affecting global demand for LCEGS is the fact that many corporations are now linking executive remuneration to the ability of... [continues]
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