Carbon trading was born out of the need to cut down on greenhouse gas emissions, and has become more and more popular across the globe in recent years. In carbon trading, carbon credits are purchased and sold by industries and organizations across the globe under the innovative cap-and-trade system, where each credit permits the emission of an equivalent of one thousand kilos of carbon dioxide and other greenhouse gases to the atmosphere.
The Kyoto protocol has fixed a cap on how much emission can be allowed globally, which is later transformed into carbon credits, and each operator receives a particular number of these credits. Organizations that have extra credits due to their adoption of greener alternatives can sell credits to organizations that will fall into the high-emission segment for exceeding their authorized limits. High-emission operators are discouraged for their high emissions by this monetary compensation for polluting the atmosphere.
So far market responses on carbon trading have been encouraging, with most large industries throughout the world embracing this emission-lowering method. This is because such quid pro quo trade makes their short-term and medium-term planning more flexible.
Carbon trading is rising exponentially every year, as per the figures reported by the World Bank's Carbon Finance Unit. The years 2003 and 2004 saw a trading growth of 41% in the market, while the increase in the following cycle has been an unprecedented 240%. Growth in the London centred carbon finance market has also been very remarkable, proving the fact that carbon trading is turning out to be a profitable business strategy for a number of companies. Several states and industries in the US have also adopted carbon trading practices, even though the nation is not a signatory to the Kyoto Protocol. The EU too, with its own carbon trading system, has been actively involved in carbon trading for a few years now.
However, there are certain groups who have criticised this policy. As one of the purposes of carbon trading is to encourage the development of more eco-friendly, low-emission technologies, the immense increase in carbon trading is a cause of concern as it indicates that businesses are opting to spend more on the purchase of carbon credits rather than investing in more eco-friendly technologies. Therefore some groups are doubtful of the long-term benefits of carbon trading, and some specialists have suggested the imposition of carbon tax to be paid by negligent organizations as a better solution to greenhouse gas emissions.
About the Author:
Learn more about Carbon Trading and Carbon Offset and get a deeper understanding on how you can help in saving the environment. You are welcome to reprint this article - but get your own unique content version here.
Get all the information and photos:: http://coringa.info/lawlegal/carbon-trading-market-background-and-trends
0 comments:
Post a Comment