What are the main challenges of emissions trading systems?

What are the main challenges of emissions trading systems?

Emissions trading systems face several challenges, including market volatility, regulatory uncertainty, and ensuring compliance.

How does market volatility affect these systems?

Market volatility can lead to price fluctuations, making it difficult for companies to plan their emissions reduction strategies.

What regulatory uncertainties are involved?

Regulatory uncertainties can arise from changes in government policies, which may affect the cap on emissions or the allocation of permits.

Are there any successful examples of emissions trading systems?

Yes, the European Union Emissions Trading System (EU ETS) is one of the largest and most established examples, showing some success in reducing emissions.

What can be done to improve these systems?

Improvements can include better monitoring and reporting, more stable regulatory frameworks, and enhanced market mechanisms to reduce volatility.