Overview
Carbon credit trading is a market-based mechanism designed to reduce greenhouse gas emissions. Under cap-and-trade systems, governments set a limit (cap) on total emissions and issue a finite number of permits. Companies that reduce emissions below their allowance can sell surplus credits to those exceeding limits. This creates a financial incentive for emission reductions and drives investment in cleaner technologies. The global carbon market was valued at over $900 billion in 2023 and continues to grow as more jurisdictions adopt carbon pricing mechanisms.
Tags
carbon marketsemissions tradingcap-and-tradeclimate finance
Economic Impact
High Impact
Drives $900B+ global market, incentivizes clean technology investment, and creates new financial instruments.
Emerged
1997
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