Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It works by putting a limit or cap on the total amount of a specific pollutant that can be emitted. Companies or other groups areallocated emission allowances which they can sell to or purchase from one another as needed. The limit or cap ensures that emissions are gradually reduced over time. Emissions trading is a cost-effective approach to reduce pollution and drive green investments in industries across several sectors.
The global Emissions Trading Market is expected to exhibit a CAGR of 6.8% over the forecast period of 2024 to 2031.
Key Takeaways
Key players operating in the emissions trading market include 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.
The key opportunities in the emissions trading market include establishing regional and global emissions trading programs, improving emission tracking and reporting systems, investments in clean technologies and renewable energy sources. Over 130 countries have either initiated or are in advanced stages of initiating emissions trading programs to achieve their climate goals, driving significant growth opportunities.
With the implementation of stringent government regulations worldwide and increasing participation of private companies in carbon neutrality initiatives, the Emissions Trading Market Size is expected to witness substantial expansion globally over the forecast period. Many large corporations have already announced plans to achieve net zero emissions by 2050 or earlier, creating a robust demand for emissions credits and allowances.
Market Drivers
Rising government initiatives and investments in climate action programs across major countries are expected to be a key driver for the emissions trading market. Many nations have committed to ambitious emissions reduction targets under the Paris Agreement and are focusing on market-based instruments like emissions trading to achieve those goals in a cost-effective manner. Investments in green technologies, renewable energy sources and energy efficiency measures are also driving the need for emissions trading between participating entities. With growing carbon pricing worldwide, emissions trading is garnered to play a pivotal role in decarbonizing energy and industrial sectors over the next decade.
PEST Analysis
Political: Emissions trading is regulated by government through establishment of cap and trade programs. These programs specify the total amount of specific pollutants that can be emitted by a group of sources each year and allocate emissions allowances that correspond with the cap. Allowances can be traded among sources within the group. This enables the market to identify the lowest-cost approach to meeting the emissions cap. However, changes in government regulations and programs could impact the market.
Economic: Emissions trading market performance is influenced by macroeconomic conditions. During economic growth periods, industrial and commercial activity increases which raises demand for emissions allowances. Conversely, during economic downturns activity declines reducing emissions and allowance prices. Fluctuations in factors like energy prices, GDP growth and interest rates also impact the market.
Social: Growing public and corporate concern over climate change has increased social pressure on industries and organisations to reduce their carbon footprint. This drives participation in emissions trading schemes to find cost-effective ways to lower GHG emissions. Greater awareness and demand for sustainability could expand the regulatory scope and scale of cap and trade programs in the future.
Technological: Advances in low-carbon technologies help lower emitters' compliance costs and reduce overall emissions. Innovations in renewable energy, carbon capture utilization and storage, energy efficiency, and other clean technologies provide alternatives to fossil fuel use and make emissions reductions more feasible and affordable over time. This influences activity in the trading market.
Geographical concentration:
In terms of value, the emissions trading market is currently concentrated in Europe and North America. The European Union Emissions Trading System (EU ETS) is the largest emissions trading scheme in the world, representing over 50% of the global market by value. California and the Northeast US also have significant cap and trade programs in operation.
Fastest growing region:
Overall, analysts project the Asia Pacific region will experience the fastest growth in the emissions trading market during the forecast period. Major economies like China, Japan and South Korea are establishing new carbon trading platforms and schemes. Rising emissions in developing nations is increasing focus on low-carbon strategies and investments in clean technologies driving growth opportunities in Asia Pacific emissions trading.
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About Author:
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc. (https://www.linkedin.com/in/money-singh-590844163)
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