- Carbon emission trading
Carbon emissions trading is
emissions trading specifically forcarbon dioxide (calculated in tonnes ofcarbon dioxide equivalent or tCO2e) and currently makes up the bulk of emissions trading.It is one of the ways countries can meet their obligations under the
Kyoto Protocol to reduce carbon emissions and thereby mitigate global warming.Units
The units which may be transferred under Article 17 emissions trading, each equal to one metric tonne of emissions (in CO2-equivalent terms), may be in the form of: [ [http://unfccc.int/kyoto_protocol/mechanisms/emissions_trading/items/2731.php Emissions Trading ] ]
* An
assigned amount unit (AAU ) issued by an Annex I Party on the basis of its assigned amount to Articles 3.7 and 3.8 of the Protocol.
* Aremoval unit (RMU ) issued by an Annex I Party on the basis of land use, land-use change and forestry (LULUCF ) activities under Articles 3.3 and 3.4 of the Kyoto Protocol.
* Anemission reduction unit (ERU ) generated by ajoint implementation project under Article 6 of the Kyoto Protocol.
* Acertified emission reduction (CER ) generated from aclean development mechanism project activity under Article 12 of the Kyoto Protocol.Transfers and acquisitions of these units are to be tracked and recorded through the registry systems under the Kyoto Protocol.
Market trend
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) [http://carbonfinance.org/docs/StateoftheCarbonMarket2006.pdf] which was itself a 41% increase relative to 2003 (78 mtCO2e). [ [http://carbonfinance.org/docs/CarbonMarketStudy2005.pdf Microsoft Word - Carbon Market Study 2005 - FINAL - Letter.doc ] ]
Business reaction
With the creation of a
market for mandatory trading of carbon dioxide emissions within the Kyoto Protocol, the London financial marketplace has established itself as the center of the carbon finance market, and is expected to have grown into a market valued at $60 billion in 2007. [ [http://www.pointcarbon.com Point Carbon news] ] The voluntary offset market, by comparison, is projected to grow to about $4bn by 2010. [ [http://www.ft.com/cms/s/2/282b278c-f4db-11db-b748-000b5df10621,dwp_uuid=3c093daa-edc1-11db-8584-000b5df10621.html "The carbon market"] Fiona Harvey, FTApril 27 2007 ]Twenty three
multinational corporation s came together in theG8 Climate Change Roundtable , a business group formed at the January 2005World Economic Forum . The group included Ford,Toyota ,British Airways ,BP andUnilever . On9 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. [http://www.weforum.org/pdf/g8_climatechange.pdf] By December 2007 this had grown to encompass 150 global businesses. [ [http://www.epa.gov/climateleaders/partners/ List of climate leaders] EPA {December 12] ]Business in the UK have come out strongly in support of emissions trading as a key tool to mitigate climate change, supported by Green NGOs. [ [http://www.defra.gov.uk/environment/climatechange/trading/eu/pdf/manifesto-uk.pdf Defra, UK - Error page ] ]
References
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