Carbon emissions trading involves the trading of permits to emit carbon dioxide (and other greenhouse gases, calculated in tonnes of carbon dioxide equivalent, tCO₂e). It is one of the ways countries can meet their obligations under the Kyoto Protocol to reduce carbon emissions and thereby mitigate global warming. Emissions trading (or cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants [1]. In such a plan, a central authority (usually a government agency) sets a limit or cap on the amount of a pollutant that... Carbon dioxide is a chemical compound composed of one carbon and two oxygen atoms. ... Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ... This article or section does not cite its references or sources. ... Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ... Mitigation of global warming involves taking actions aimed at reducing the extent or likelihood of global warming. ...

Carbon emissions trading has been steadily increasing in recent years. According to the World Bank's Carbon Finance Unit, 374 million metric tonnes of carbon dioxide equivalent (tCO₂e) were exchanged through projects in 2005, a 240% increase relative to 2004 (110 mtCO₂e)[1] which was itself a 41% increase relative to 2003 (78 mtCO₂e).[2]

The world's only mandatory carbon trading program is the European Union Emissions Trading Scheme (or EUETS). Created in conjunction with the Kyoto Protocol, a 1997 international treaty that took effect in 2005, it caps the amount of carbon dioxide that can be emitted from large installations, such as power plants and factories, in the EU's 25 member countries. (AP) The European Union Emission Trading Scheme (EU ETS) is the largest multi-national, greenhouse gas emissions trading scheme in the world. ... Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ...

Operation

A country (or group of countries) caps its carbon emissions at a certain level (this is known as cap and trade) and then issues permits to firms and industries that grant the firm the right to emit a stated amount of carbon dioxide over a time period. Firms are then free to trade these credits in a free market. Firms whose emissions exceed the amount of credits they possess will be heavily penalised. The idea behind carbon trading is that firms that can reduce their emissions at a low cost will do so and then sell their credits on to firms that are unable to easily reduce emissions. A shortage of credits will drive up the price of credits and make it more profitable for firms to engage in carbon reduction. In this way the desired carbon reductions are met at the lowest cost possible to society. Emissions trading is a proposed economic solution to air pollution. ...

Business opinion

With the creation of a market for trading carbon dioxide emissions within the Kyoto Protocol, it is likely that London financial markets will be the centre for this potentially highly lucrative business; the New York and Chicago stock markets would like a share (which is unlikely as long as the US rejects Kyoto).[3] The European Union Greenhouse Gas Emission Trading Scheme (EU ETS) began operations on 1 January 2005. Look up Market in Wiktionary, the free dictionary. ... New York Stock Exchange (June 2003) The New York Stock Exchange (NYSE) is one of the largest stock exchanges in the world. ... Nickname: The Windy City, The Second City, Chi Town, City of the Big Shoulders, The 312, The City that Works Motto: Urbs In Horto (Latin: City in a Garden), I Will Location in Chicagoland and Illinois Coordinates: Country United States State Illinois County Cook & DuPage Incorporated March 4, 1837  - Mayor... Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ... The European Union Greenhouse Gas Emission Trading Scheme (EU ETS) is the largest multi-national, greenhouse gas emissions trading scheme in the world. ... January 1 is the first day of the calendar year in both the Julian and Gregorian calendars. ...

23 multinational corporations have come together in the G8 Climate Change Roundtable, a business group formed at the January 2005 World Economic Forum. The group includes Ford, Toyota, British Airways and BP. On 9 June 2005 the Group published a statement stating that there was a need to act on climate change and stressing the importance of market-based solutions. It called on governments to establish "clear, transparent, and consistent price signals" through "creation of a long-term policy framework" that would include all major producers of greenhouse gases. A multinational corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) or multinational organization (MNO) is a corporation or enterprise that manages production establishments or delivers services in at least two countries. ... This article or section does not cite its references or sources. ... It has been suggested that this article be split into articles entitled Ford Motor Company and Ford (vehicles). ... This article is about the multinational corporation. ... For the 1930s airline of similar name, see British Airways Ltd. ... BP plc (LSE: BP, NYSE: BP, TYO: 5051 ), originally British Petroleum, is a British energy company / multinational oil company (oil major) with headquarters in London which is amongst the largest private sector energy corporations in the world, and one of the six supermajors (vertically integrated private sector oil exploration, natural... June 9 is the 160th day of the year in the Gregorian calendar (161st in leap years), with 205 days remaining. ...

Controversy

There are critics of the schemes, mainly environmental justice NGOs and movements who see carbon trading as a proliferation of the free market into public spaces and environmental policy-making.[4] They point to failures in accounting, dubious science and destructive impacts of projects upon local peoples and environments as reasons why trading pollution rights should be avoided.[5] Instead they advocate making reductions at the source of pollution and energy policies that are justice-based and community-driven.[6]

The National Allocation Plans by member governments of the European Union Emission Trading Scheme have been criticised due to some governments issuing more carbon credits than emissions during Phase I of the scheme. They have also been criticised for the widespread practice of grandfathering, where polluters are given carbon credits by governments, instead of being made to pay for them. [7] The European Union Emission Trading Scheme (EU ETS) is the largest multi-national, greenhouse gas emissions trading scheme in the world. ... In the United States, a grandfather clause is an exception which allows something pre-existing to remain as it is, despite a change to the contrary in the rules applied to newer situations. ...

Many environmental activists and foundations consider Al Gore's strong proponency of carbon trading to be a denial of the imminence of climate change and a formalized failure of international policy to address the gravity of the carbon increase. Critics of carbon trading, such as Carbon Trade Watch argue that offsets place disproportionate emphasis on individual lifestyles and carbon footprints, distracting attention from the wider, systemic changes and collective political action that needs to be taken to tackle climate change.^[1] Albert Arnold Gore, Jr. ... premise While we witness the emergence of a new carbon economy, key questions remain unanswered regarding the impact global pollution trading will have on society and the environment. ...

See also

• Clean Development Mechanism
• Low-carbon economy
• Greenwash
• Carbon credit
• Carbon mutual
• Demand Responsive Transit Exchange

CDM directs here. ... A low-carbon economy is a future economy in which the use of carbon based fuels and carbon dioxide emissions from burning fuels are significantly reduced. ... Greenwash (a portmanteau of green and whitewash) is a term that environmentalists and other critics give to the activity of giving a positive public image to putatively environmentally unsound practices. ... Carbon credits are a tradable permit scheme. ... Carbon Mutual is a term meaning, people co-operating to become Carbon neutral The Carbon Mutual Company is a small organisation dedicated to investing in projects in the UK and Africa, to offset carbon emissions generated from the UK. We help people to reduce and offset their carbon usage, by... // Just as in financial world there are Stock Exchanges, Commodities Exchanges and Bond Exchanges, there also now exists a Demand Responsive Transit Exchange. ...

External links

• Chicago Climate Exchange - CCX is the world’s first and North America’s only voluntary, legally binding rules-based greenhouse gas emission reduction and trading system
• International Emissions Trading Association
• The Stern Review on the economics of climate change - Chapters 14 and 15 have extensive discussions on emission trading schemes and carbon taxes
• EcoSecurities - One of the major carbon trading companies
• The Case Against Carbon Trading - Rising Tide Factsheet
• Carry On Polluting - Comment and analysis piece by Larry Lohmann, published in New Scientist magazine on the 2nd December 2006
• Ways Forward - Chapter 5 of the book, "Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power", published October 2006 by Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House.
• The New Carbon Cycle Blog dedicated to using carbon markets to harmonize human activities and economies with natural climate systems and cycles.
• Carbon mutual, carbon offset provider.