The world is facing a critical threat with climate shifts. It is a monumental issue that endangers everyone, irrespective of their economic status or where they live, whether in a developed or developing nation. This threat is immediate and clear to us all. The urgent requirement is to lower greenhouse gas emissions, including carbon dioxide (CO2) and methane (CH4). However, achieving emission reductions is costly, typically requiring substantial projects.
Governments are employing carbon trading as a strategy to decrease their emissions. Market-based strategies for carbon mitigation have rapidly expanded since the 2015 Paris Agreement, with 73 national/sub-national jurisdictions encompassing 11.66 billion tonnes of CO2e emissions, equating to about 23 percent of worldwide greenhouse gas emissions. These solutions encompass carbon pricing and cap-and-trade systems, with prominent examples in the EU, UK, Sweden, and China. This market-driven approach is designed to create economic incentives for nations and companies to lessen their impact on the environment.
[This article has been reproduced with permission from the Indian School of Business, India]