While cap and trade systems present opportunities, they also pose several challenges:
1. Initial Investment: Developing new, energy-efficient technologies or processes often requires significant upfront investment, which can be a barrier for small businesses. 2. Regulatory Compliance: Staying compliant with emission regulations can be complex and time-consuming. Entrepreneurs may need to invest in regulatory expertise or software solutions to manage compliance effectively. 3. Market Volatility: The price of emission allowances can be volatile, adding an element of financial risk. Entrepreneurs need to develop strategies to manage this uncertainty.