The emissions trading market involves trading of carbon credits between organizations and governments with the goal of reducing greenhouse gas emissions cost-effectively on a large scale. Emissions trading allows governments to set an emissions cap and allocate allowances to organizations, which can be traded if the actual emissions are less than allocated. Organizations that exceed their emission allowance must purchase additional credits from organizations that have surplus, thereby providing flexibility and financial incentive to lower emissions. With rapid climate change concerns, many countries have adopted stringent CO2 reduction targets through the Paris Agreement. This has significantly driven demand for emissions trading and carbon offset programs.
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.
The market involves trading of carbon credits from diverse industries including power, oil & gas, commercial aviation, waste management and others. Emissions trading encourages adoption of cleaner technologies and fuels to lower carbon footprint and facilitate sustainable development. The program relies on market mechanism of supply and demand to achieve emission reductions in a cost-effective manner.
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. The market offers growth opportunities through European emissions trading system, compliance with renewable energy goals, carbon offset programs, and transition to carbon neutrality. Major countries and regions pioneering emissions trading include European Union, China, Canada, USA and others which are further expected to drive its global expansion until 2031.
Market drivers
Stringent government regulations and plans for deeper emission cuts will be a key driver for Emissions Trading Market Growth. The Paris Agreement has set the goal of restricting global temperature rise to well below 2°C which will mandate stricter carbon reduction targets. As a result, many countries have announced plans to become carbon neutral by 2050. This will significantly increase demand for carbon credits and offset programs. Further, transition to a green economy will accelerate adoption of cleaner technologies like renewables and electric vehicles thereby supporting market growth during the forecast period.
PEST Analysis
Political: The emissions trading market is heavily regulated by environmental policies and regulations. Changes in policies regarding carbon emission taxes and quotas directly impact this market. The Paris Climate agreement fostered growth in carbon trading globally.
Economic: Economic growth and industrialization in developing nations increase their carbon emissions which presents opportunities for emissions trading. The overall economic outlook and GDP growth rates impact carbon quotas and taxes set by governments which determine demand.
Social: Rising awareness about climate change and carbon footprint of industries are pushing for lower emissions worldwide. Public and investor pressure on industries to reduce their carbon emissions and adopt greener practices augment demand for emissions credits and offsets.
Technological: Advancements in renewable energy, green technologies, carbon capture and storage solutions lower the carbon footprint of industries and nations. New verification and monitoring technologies help address issues related to additionality and allowances in emissions trading schemes strengthening their credibility.
Geographical regions with high market concentration in terms of value are Europe and North America. The European Union Emissions Trading System (EU ETS) is the largest carbon market globally accounting for over 80% of the total value. In North America, the Western Climate Initiative and Regional Greenhouse Gas Initiative have expanded emissions trading between Canadian provinces and American states.
The fastest growing region is Asia Pacific with China operating the world's second largest carbon market. Other developing Asian nations are establishing their emissions trading schemes on gaining economic development and seeking to reduce carbon intensity. The upcoming launch of carbon markets in large developing countries like Brazil, Mexico and South Korea indicate substantial opportunities for future growth in the APAC region.
Get more insights on Emissions Trading Market
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)
