Market tipped for continued expansion, driven by strong demand from energy and utility sectors
From Business Green , Published 13 January 2014
The global environmental consultancy market expanded again last year, growing 3.6 per cent year-on-year to $27.4bn as analysts tipped the sector for further expansion over the next five years.
New research from Environment Analyst suggested that the industry was continuing to defy tough economic conditions in a number of key markets as demand for a range of environmental consultancy services continued to grow.
"The economic regional disparities worldwide have forced the sector to be both more responsive and adaptable to often uncertain and fast-developing market conditions within their home markets and overseas," said Liz Trew, editor of Environment Analyst's Global Market Intelligence Service and co-author of the report, in a statement. "Overall, however, we see that many of the leading global players within this field are not only recovering from the impact of the global financial crisis and ongoing government austerity programmes but also responding to and, in some cases, thriving in challenging conditions."
The report found contaminated land services dominated the market, accounting for an estimated 29 per cent of environmental consultancy revenues globally. It was followed by water and waste management services, which accounted for 24 per cent of the market, and environmental impact assessment and sustainable development serves, which generated 17 per cent of revenues. In contrast, environmental management, compliance and due diligence services represented just over 15 per cent of the market, while climate change and energy-related services generated a further 9.4 per cent of the total.
In terms of demand for environmental consultancy, the energy and utility sector overtook the public sector as the largest market, as government clients in key geographies were impacted by austerity programmes. Energy and utility firms accounted for just over 30 per cent of the market, followed by governments and regulators with a 29 per cent share, and mining, manufacturing, and process industries with a quarter of the market.
According to the report, the environmental consultancy market remains highly competitive, with only two companies - CH2M Hill and Tetra Tech Inc - commanding a market share of more than five per cent.
However, there are signs of consolidation in the market, with the 22 largest consultancies globally accounting for 44 per cent of the total market and this so-called "Global 22" growing at 6.1 per cent last year compared to a market growth rate of 3.6 per cent.
Trew said the sector was now expected to grow to $31.7bn by 2017.
"Although our forecast model projection for the global market is for a fairly modest compound annual growth rate of 3.0 per cent over the next five years, this nevertheless equates to an additional £4.3bn in EC revenues being added by 2017," she said. "However, we expect many of the largest companies to supersede this level of growth as they have done so historically. Moreover, future growth will be highly sector- and region-specific, with spend on climate change and energy services set to grow by over 35 per cent in the next five-year period, while EIA and sustainable development spend will increase by almost 17 per cent."
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