The Emissions Trading Market is a multi-billion dollar industry designed to reduce emissions of carbon dioxide and other greenhouse gases into the atmosphere. Emission trading schemes involve the capping of total emissions from various emitters which are then allowed to trade permits to emit. These permits, also known as carbon credits, can be bought and sold according to supply and demand.
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 from 2024 to 2031.
Emissions Trading Market Size provide incentives for achieving emissions reductions at the lowest possible cost by allowing the most efficient emitters to deliver disproportionately large cuts or new products and services with very low carbon intensities. Major industries such as power generation, oil & gas production, chemicals, and iron & steel are major participants in emissions trading markets. The inherent flexibility of emissions trading schemes enable emission reductions from various sources and through multiple pathways, whether via capturing emitted carbon, switching to lower carbon fuels, improving energy efficiency or deploying low-carbon technologies.
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 in the market include the linking of various regional carbon markets to expand trading coverage and liquidity. The development of standardized carbon offsets and credits also opens up new opportunities for traders, offset generators and project developers.
Technological advancements such as blockchain integration in trading platforms is enhancing transparency, traceability and security in emission reporting and trading. Digitalization of processes is enabling participation of SMEs through low-cost digital solutions. New carbon accounting methods are also being developed to capture emission reductions from sectors not covered under existing schemes.
Market Drivers
Stringent regulations around the world to curb emissions and transition to a low-carbon economy are a key driver for growth of emissions trading markets. Over the forecast period, new and expanded carbon markets are expected to be established in major economies like China, Korea, and California. This will help achieve emission reduction targets set under the Paris Agreement on climate change. Furthermore, a shift towards transparent, advanced digital trading infrastructures would attract greater participation from enterprises seeking cost-effective compliance options.
Challenges in Emissions Trading Market:
The Emissions Trading Market faces some key challenges which restraint its growth.
One of the major challenge is technology development which is critical for emissions monitoring and verification. Accurate measurement of greenhouse gas emissions across various sectors is a difficult task which require advanced sensing and monitoring technologies. However, deployment of new and emerging technologies like IoT, AI, blockchain etc. are still in nascent stage.
Lack of standardized rules and regulations across different regions and countries create ambiguities in the market. As emission laws and compliance requirement varies, it hampers cross border trading opportunities.
SWOT Analysis
Strength: Well established market mechanism with over a decade of implementation experience. Offers cost effective compliance to emission regulations.
Weakness: Highly dependent on political will of governments. Subject to changes in emission targets and policies.
Opportunity: Growth in emerging markets for carbon offset programs. New opportunities from industry diversification in renewable energy, energy efficiency etc.
Threats: Competition from alternative climate change solutions like carbon tax. Impact of economic slowdowns on trading volumes.
Geographical Regions
Europe dominates the emissions trading market and accounts for over 60% of the global market value currently. Countries like Germany, France and United Kingdom are major contributors.
Asia Pacific region is expected to be the fastest growing region during the forecast period. Developing economies in the region are strengthening their climate change commitments which will boost carbon trading. China launched its national emission trading scheme in 2021 which will accelerate market growth.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it