The emissions trading market involves trading of carbon credits where a carbon credit represents the right to emit one ton of carbon dioxide or its equivalent of other greenhouse gases. Companies and industries trade these carbon credits in emissions trading programs setup by governments to curb greenhouse gas emissions. The emissions trading is a cost-effective strategy to reduce overall carbon footprint in a flexible and decentralized manner. The emissions trading market helps industries and business lower cost of compliance with environmental regulations by providing incentives to polluters to reduce emissions.
The Global emissions trading market is estimated to be valued at US$ 385.69 Bn in 2024 and is expected to exhibit a CAGR of 6.8% over the forecast period 2024 To 2031.
Government regulations on carbon emissions are becoming more stringent worldwide in order to curb the impacts of climate change. This is a major factor driving the growth of the emissions trading market as it provides a market-based mechanism to comply with environmental norms in a cost-effective way.
Key Takeaways
Key players operating in the emissions trading market are Johnson & Johnson Services, Inc., 3M, Baxter, Coloplast A/S, Integra LifeSciences, Medtronic, Omeza, Cardinal Health, Bactiguard AB, Noventure, Essity, Schulke & Mayr GmbH, Smith & Nephew Plc., Convatec Group PLC, SANUWAVE and SANUWAVE Health, Inc., EO2 Concepts, Wound Care Advantage, LLC., Healthium Medtech Limited, Arch Therapeutics, Inc., Hydrofera, Sanara MedTech Inc., Axio Biosolutions Pvt Ltd., and Gentell, Inc. Key opportunities lies in expanding emissions trading programs to more regions and industries globally. Technological developments include increased use of blockchain technologies to make carbon credit trading more transparent and trackable.
Market Drivers
Stringent government regulations on carbon emissions is a major Emissions Trading Market Growth driver as it leads industries and companies to lower carbon footprint and invest in emission reduction activities. Participation in emissions trading programs provides a cost-effective compliance mechanism to these regulations. Growing awareness about climate change impacts and global commitment to reduce GHG emissions as enshrined in the Paris Agreement also drives demand for market-based flexibility mechanisms like carbon trading.
Current challenges in the emissions trading market
The emissions trading market continues to face various challenges. Stringent environmental policies and regulations have increased compliance costs for companies. Monitoring and measuring greenhouse gas emissions accurately also remains a complex challenge. While digital technologies are helping improve emission tracking, inconsistencies in data collection methods impact the integrity of trading schemes. Developing common accounting standards also takes time. Ensuring market stability in the face of economic fluctuations is another hurdle. Ensuring a fair distribution of the cost burden across industry sectors to avoid competitiveness issues is difficult to achieve. International coordination of policies has been slow, hampering linkages between regional trading programs.
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