Emissions Trading & Markets
Emissions trading uses markets to determine how to deal with the problem of increasingly high concentrations of “pollution” or the greenhouse gases (GHG) in the atmosphere blamed for climate change. The emissions trading is often referenced as an example of effective “free market environmentalism”. However, emissions trading also requires a cap to effectively reduce emissions, and the cap is a government regulatory mechanism. (See: Cap & Trade Overview)
The combination of market forces and regulatory mechanisms have led to a myriad of emission trading “schemes”. The compliance or regulated market has been principally operating under the United Nations Framework Convention on Climate Change (UNFCCC) and the associated Kyoto Protocol. The largest market trading program has been the European Union’s Emission Trading Scheme (EU ETS).
Various emissions trading schemes exist inside and outside the scope of the Kyoto Protocol. These trading schemes are all part of the commitment of nations or companies to reduce their GHG emissions. A short description (along with links to greater detail) of the relevant trading programs can be found under the following headings:
- UNFCCC: The Kyoto Protocol, the Clean Development Mechanism and Joint Implementation
- EU ETS – European Emissions Trading Scheme
- New South Wales Abatement Scheme
- Canadian Emission Trading Scheme
U.S. Regulatory Programs and Markets:
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