Emissions trading is an administrative approach used to reduce the cost of pollution control by providing economic incentives for achieving reductions in the emissions of pollutants. In such a plan, a central authority, such as an air pollution control district or a government agency, whether on a federal or state level, sets limits or "caps" on each pollutant, recognizing that clean air is a common-pool resource. Groups that intend to exceed the limits may buy emissions credits from entities that are able to stay below their designated limits. This transfer is normally referred to as a trade. Look up Administration in Wiktionary, the free dictionary The word administration is from the Middle English administracioun, deriving from the French administration, which is itself derived from the Latin administratio: a compounding of ad (to) and ministratio (to give service). In modern usage, the word has particular meanings in particular... Water pollution Environmental pollution is the release of environmental contaminants. ... Buyers bargain for good prices while sellers put forth their best front in Chichicastenango Market, Guatemala. ... In economics, an incentive in anything that provides a motive for a particular course of action — that counts as a reason for preferring one choice to the alternatives. ... Pollutants are substances which directly or indirectly damage us or the environment. ... An agency is a department of a local or national government responsible for the oversight and administration of a specific function, such as a customs agency or a space agency. ... A federation (Latin: foedus, covenant) is a state comprised of a number of partially self-governing regions (often themselves referred to as states) united by a central (federal) government. ... A state is an organized political community, occupying a territory, and possessing internal and external sovereignty, which successfully claims the monopoly on the use of force. ... This power plant in New Mexico releases sulfur dioxide and particulate matter into the air. ... The terms common-pool resource (CPR), alternatively termed a common property resource, is a particular type of good, and a natural or human-made resource system, whose size or characteristics of which makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use. ... A fruit stand at a market. ...

In some emission trading systems a portion of the traded credits are required to be retired. By retiring some of the credits the system achieves a net reduction in emissions, as well as cost reduction, from each trade. Most authorities agree that emissions trading is an effective strategy if properly designed and administered.

Emissions trading or marketable rights have been in use in the United States since the mid-1970s. The advocates of free-market environmentalism sometimes use emissions trading or marketable rights systems as examples to support the theory that free markets can handle environmental problems. The total amount of available marketable or tradable rights is generally set by a political process, not by the market; but the systems allows the market to determine how to deal with the resulting allocation problem. Free market environmentalism is an ideology that argues the free market is the best tool to preserve the health and sustainability of the environment. ... Political science is a social science discipline that deals with the theory and practice of politics and the description and analysis of political systems and political behavior. ...

The idea is that a central authority will grant an allowance to entities based upon a measure of their need or their previous pollution history. For example an allowance for greenhouse gas emissions to a country might be based upon total population of the country or based on existing emissions of the country. An industrial facility might be granted a license for its current actual emissions. If a given country or facility does not need all of its allowance, it may offer it for sale to another organization that has insufficient allowances for its emission production. Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ... It has been suggested that Licensing (strategic alliance) be merged into this article or section. ...

Prominent trading systems

Perhaps the most successful emission trading system to date is the SO₂ trading system under the framework of the 'Acid Rain Program' of the 1990 Clean Air Act. Under the program, which is essentially a cap-and-trade emissions trading system, SO₂ emissions are to be reduced by 50 % from 1980 to 2010. For more information, see main article: Acid Rain Program. This article needs cleanup. ...

In 1997, the State of Illinois adopted a trading program for volatile organic compounds in the Chicago area, called the Emissions Reduction Market System[1]. Beginning in 2000, over 100 major sources of pollution in 8 Illinois counties began trading pollution credits. Official language(s) English Capital Springfield Largest city Chicago Area  - Total  - Width  - Length  - % water  - Latitude  - Longitude Ranked 25th 149,998 km² 340 km 629 km 4. ... Nickname: The Windy City Motto: Urbs In Horto (Latin: City in a Garden), I Will Official website: http://egov. ...

In 2003, New York State proposed and attained commitments from 9 Northeast states to cap and trade carbon dioxide emissions. Official language(s) None, English de facto Capital Albany Largest city New York City Area  - Total  - Width  - Length  - % water  - Latitude  - Longitude Ranked 27th 141,205 km² 455 km 530 km 13. ... Regional definitions vary from source to source. ... Carbon dioxide is an atmospheric gas comprised of one carbon and two oxygen atoms. ...

The European Union Emission Trading Scheme is the largest multi-national, greenhouse gas emissions trading scheme in the world. It commenced operation in January 2005 and all 25-member states of the European Union participate in the scheme. The European Union Emission Trading Scheme (EU ETS) is the largest multi-national, greenhouse gas emissions trading scheme in the world. ...

The Kyoto Protocol will bind ratifying nations to a similar system, with the UNFCCC setting caps for each nation. Under the proposed treaty, nations that emit less than their quota of greenhouse gases will be able to sell emissions credits to polluting nations. Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ... Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ...

Critics of the Kyoto Protocol see it as a means of forcibly redistributing wealth from the United States to developing nations. This is because the United States, which produces 25% of the world's "greenhouse" gas emissions, would likely exceed its quota and would have to buy emissions credits from nations such as the People's Republic of China, India, and Russia. However, this is changing, as the economy of the People's Republic of China and the economy of India are growing rapidly. Income redistribution or redistribution of wealth is a political policy promoted by members of the political left, especially socialists, and opposed by members of the political right. ... A developing country is a country with low average income compared to the world average. ... For the purpose of this article, the economies of the Special Administrative Regions of Hong Kong and Macau are considered separate from the rest of the Peoples Republic of China. ... The economy of India is the fourth-largest in the world as measured by purchasing power parity (PPP), with a GDP of US $3. ... Accumulated GDP growth for various countries. ...

Critics also argue that emissions trading does little to solve pollution problems overall, as groups that do not pollute sell their conservation to the highest bidder. Overall reductions would need to come from a reduction of permits available in the system. Likely this would occur over time through central regulation, though some environmental groups acted more immediately by buying credits and refusing to use or sell them. Nevertheless, the transfer of wealth from polluters to non-polluters provides incentives for polluting firms to change, especially if the market price for pollution credits is very high. Environmentalism is the support of or involvement with the environmental movement by environmentalists. ...

Effects on society and private enterprise

In private enterprise, emissions trading is very attractive because it does not harm industrial concerns, or require government subsidies. When the price per ton of emissions becomes high enough, well-managed polluting enterprises can make a rational decision to invest in pollution control equipment, and sell part of their emissions licenses. Capitalism generally refers to a combination of economic practices that became institutionalized in Europe between the 16th and 19th centuries, especially involving the right of individuals and groups of individuals acting as legal persons (or corporations) to buy and sell capital goods such as land, labor, and money (see finance... This article or section contains information that has not been verified and thus might not be reliable. ...

In some proposed systems, the government grants tax credits to enterprises. However, these are more expensive for governments, and far less popular for that reason. Emissions trading is attractive to public interest environmental organizations, because in an open market they can purchase and retire emissions licenses. This permanently reduces the total amount of pollution produced. Within the Australian, Canadian, United Kingdom, and United States tax systems, a tax credit is an item which is treated as a payment already made towards taxes owed. ... Public interest is a term used to denote political movements and organizations that are in the public interest—supporting general public and civic causes, in opposition of private and corporate ones (particularistic goals). ...

Effects on the environment

While emissions trading does not in itself reduce pollution, it encourages manufacturers to decrease pollution so they can sell their credits to other larger polluters and profit. The intention is to create a monetary incentive for companies to reduce pollution. By making it more costly to pollute, it effectively causes companies to compete at being less pollutive while being cost effective. Profit is a positive return made on an investment by an individual or by business operations. ... An example of Money. ... In economics, business, and accounting, a cost is a price paid, or otherwise associated with, a commercial event or economic transaction. ...

An important secondary effect is to disperse pollution sources. This occurs because the operators of polluting enterprises will naturally sell as many licenses as they can afford. This can be good, because at any given location, concentrations of a pollutant will be significantly less. Dispersing air pollutants may have negative effects as well. For instance, some environmental hazards, such as smog are caused by small amounts of pollutants dispersed over a wide area by automobiles and would not occur with such intensity if the same amount of pollutant was released from a single, stationary source such as a smokestack. Emissions trading thus especially becomes a concern if drivers or manufacturers of polluting vehicles are permitted to purchase credits to meet regulatory polluting limits for vehicle emissions. In chemistry, concentration is the measure of how much of a given substance there is mixed with another substance. ... Victorian London was notorious for its thick smogs, or pea-soupers, a fact that is often recreated to add an air of mystery to a period costume drama. ... An automobile is a wheeled vehicle that carries its own motor. ... Chimney stacks on a Newcastle upon Tyne building A chimney is a system for venting hot gases and smoke from a stove, furnace or fireplace to the outside atmosphere. ...

A final effect is that if the total permitted amounts are fixed or decreasing, public interest groups can decrease them further by purchasing licenses. The net effect is to drive total emissions toward zero by establishing a quantifiable financial penalty for careless pollution. Public interest is a term used to denote political movements and organizations that are in the public interest—supporting general public and civic causes, in opposition of private and corporate ones (particularistic goals). ...

Stable totals are critical to a stable market

A critical part of emissions trading is that the amount of emissions must be fixed, or controlled in some socially-agreed fashion. Many people favor starting at the current level of emissions. It clearly can form no threat for existing industrial concerns, and at the same time promises no increase in the rate of pollution. Consensus has two common meanings. ...

The total of all allowances issued may be adjusted to an agreed reduction rate for the particular emission or pollutant. Thus, the central authority may control the emissions, and allow market forces to encourage countries to produce less of the emissions.

For example, less developed countries with relatively high populations and lower pollution per head than Western countries may sell their allowances to the industrialised West. However, as the supply is finite, the more that the West produces, the more that the additional allowances will cost them, until it becomes uneconomic to pollute, and more economic to convert to less environmentally harmful technologies. The term Western world or the West can have multiple meanings depending on its context. ...

Enforcement is critical to a stable market

Another critical part of the bargain is enforcement. Without effective enforcement, the licenses have no value. Two basic schemes exist: For the band, see The Police. ...

In one, the regulators measure facilities, and fine or sanctions those that lack the licenses for their emissions. This scheme is quite expensive to enforce, and the burden falls on the agency, which then may need to collect special taxes. Another risk is that facilities may find it far less expensive to corrupt the inspectors than purchase emissions licenses. The net effect of a poorly financed or corrupt regulatory agency is a discount on the emissions licenses, and greater pollution. A fine is money paid as a financial punishment for the commission of minor crimes or as the settlement of a claim. ... Sanctions are usually monetary fines, levied against a party to a legal action or his attorney, for violating rules of procedure, or for abusing the judicial process. ... Inspector is a rank in many police forces. ...

In another, some other agency, usually a commercial agency licensed by the government, verifies that polluting facilities have licenses equal or greater than their emissions. Inspection of the certificates is performed in some automated fashion by the regulators, perhaps over the Internet, or as part of tax collection. The regulators then audit licensed facilities chosen at random to verify that certifying agencies are acting correctly. This scheme is far less expensive, placing most regulation in the private sector. In addition, auditing can be performed on well-paid contracts by persons, such as university professors or anti-pollution activists, whose reputation is more valuable to them than any practical amount of graft. An audit is an evaluation of an organization, system, process, or product. ... The private sector of a nations economy consists of those entities which are not controlled by the state - i. ...

See also

• air pollution
• acid rain
• AP 42 Compilation of Air Pollutant Emission Factors
• Carbon emissions trading
• Emission standards
• Flexible Mechanisms
• global warming
• greenhouse gas
• Kyoto Protocol

This power plant in New Mexico releases sulfur dioxide and particulate matter into the air. ... Acid rain occurs when sulfur dioxide and nitrogen oxides are emitted into the atmosphere, undergo chemical transformations and are absorbed by water droplets in clouds. ... The AP 42 Compilation of Air Pollutant Emission Factors, was first published by the U.S. Public Health Service in 1968. ... Carbon emissions trading involves the trading of permits to emit carbon dioxide (and other greenhouse gases, calculated in tonnes of carbon dioxide equivalent, tCO2e). ... Emission standards limit the amount of pollution that can be released into the atmosphere. ... Global mean surface temperatures 1856 to 2005 Mean temperature anomalies during the period 1995 to 2004 with respect to the average temperatures from 1940 to 1980 Global warming is a term used to describe the trend of increases in the average temperature of the Earths atmosphere and oceans that... Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ... Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ...

External links

• Carbon Trade Watch
• Chicago Climate Exchange
• Acid Rain Program
• Illinois' Emissions Reduction Market System
• International Emissions Trading Association
• ClimateTop50 Emissions Trading Websites