Carbon Trading - Complex and Technical

by Pauline

The folowing is from a new report by 2008 Greener World Media, Inc. (www.greenbiz.com).


The world of carbon trading is extraordinarily technical and complex, with different systems, each with a set of rules and standards that seems Byzantine to mere mortals. Their common goal is to allow the market to put a price tag on greenhouse gas emissions, thus allowing companies to buy and sell them in order to offset their emissions and meet emissions caps established in many developed countries. All of this emerged from the Kyoto Protocol, a set of binding limitations on emissions of greenhouse gases for developed nations, pursuant to the objectives of the United Nations Framework Convention on Climate Change of 1992. All major developed countries have signed the Protocols, with the notable exception of the United States.

The European Union Emission Trading Scheme (or EU ETS) is the largest multinational, greenhouse gas emissions trading scheme and was created in conjunction with the Kyoto Protocol. It is currently the world’s only mandatory carbon-trading program. In addition to the EU ETS, there are voluntary trading schemes, such as the Chicago Climate Exchange, North America’s only voluntary, legally binding greenhouse gas reduction and trading system. The exchange has more than 350 members, including major corporations, states and municipalities, universities, and others.

The carbon-trading market has grown considerably, reaching as much as $70 billion in 2007, according to the International Emissions Trading Association. But trading and emissions reductions are not the same. A single ton of greenhouse gas emissions can be traded many times.