Personal carbon trading refers to proposed emissions trading schemes under which emissions credits are allocated to adult individuals on a (broadly) equal per capita basis, within national carbon budgets. Individuals then surrender these credits when buying fuel or electricity. Individuals wanting or needing to emit at a level above that permitted by their initial allocation would be able to engage in emissions trading and purchase additional credits. Conversely, those individuals who emit at a level below that permitted by their initial allocation have the opportunity to sell their surplus credits. Thus, individual trading under Personal Carbon Trading is similar to the trading of companies under EU ETS.
Proposals
Current proposals include:
* Tradable Energy Quotas (TEQs) - devised by environmental writer, David Fleming, who first published the idea in 1996 under its former name Domestic Tradable Quotas (DTQs). The UK's Tyndall Centre for Climate Change Research has been researching this scheme since 2003, and more recently the Royal Society for the encouragement of Arts, Manufactures & Commerce (RSA) through its project RSA CarbonLimited.
* Personal Carbon Allowances (PCAs) - described in the book “How we can save the planet” by Mayer Hillman and Tina Fawcett. Work on PCAs is ongoing at the Environmental Change Institute, Oxford, UK. The title "PCAs" or "PCA scheme" is sometimes used generically to refer to any proposed form of personal carbon trading.
* Tradable Personal Pollution Allowances - originally proposed in an article by Dr. Kirk Barrett in 1995 and applicable to any form of pollution, including carbon dioxide.
Individuals would most likely hold their emissions credits in electronic accounts, and would surrender them when they make carbon-related purchases, such as electricity, heating fuel and petroleum. PCAs could also require individuals to use credits for public transport. Tradable Energy Quotas would bring all other sectors of society (eg. Industry, Government) within the scope of a single scheme.
Individuals who exceed their allocation (i.e. those who want to use more emissions credits than they have been given) would be able to purchase additional credits from those who use less, so individuals that are under allocation would profit from their small carbon footprint.
Proponents of personal carbon trading claim that it is an equitable way of addressing climate change and peak oil, as it could guarantee that a national economy lives within its agreed carbon budget and ensure fair access to fuel and energy. They also believe it would increase ‘carbon literacy’ among the public, while encouraging more localised economies.
Personal carbon trading has been criticised for its possible complexity and high implementation costs. As yet, there is minimal reliable data on these issues. There is also the fear that personal "rationing" and trading of allowances will be politically unacceptable, especially if those allowances are used to buy from industries who are already passing-on costs from their participation in carbon levy or trading schemes such as the EU ETS.
Research in this area has shown that personal carbon trading would be a progressive policy instrument - redistributing money from the rich to the poor - as the rich use more energy than the poor, and so would need to buy allowances from them. This is in contrast to a direct carbon tax, under which all lower income people are worse off, prior to revenue redistribution.
Progress towards implementation
There are no operating schemes currently in existence, although the United Kingdom Climate Change Bill will grant powers allowing the Government to introduce a personal carbon trading scheme without further primary legislation.
In May 2008 DEFRA completed a pre-feasibility study into TEQs, with the headline finding that “personal carbon trading has potential to engage individuals in taking action to combat climate change, but is essentially ahead of its time and expected costs for implementation are high”. Based on this DEFRA announced that “the Government remains interested in the concept of personal carbon trading and, although it will not be continuing its research programme at this stage, it will monitor the wealth of research focusing on this area and may introduce personal carbon trading if the value of carbon savings and cost implications change".
Later that same month the UK Parliament Environmental Audit Committee produced their report on the subject, which concluded that ”personal carbon trading could be essential in helping to reduce our national carbon footprint" and rebuked the Government for delaying a full feasibility study, stating that "although we commend the Government for its intention to maintain engagement in academic work on the topic, we urge it to undertake a stronger role, leading and shaping debate and coordinating research".
Related emissions reduction proposals and initiatives
* Carbon Rationing Action Groups - groups in the UK and US that voluntarily cap their greenhouse gas emissions
* "Icecaps" - devised by George Monbiot in his book Heat: How to Stop the Planet Burning.
Media
Carbon rationing is considered in the new feature film The Age of Stupid, set for release in February 2009.
From http://en.wikipedia.org/
Saturday, December 12, 2009
Friday, December 11, 2009
Carbon project
A carbon project refers to a business initiative that receives funding because of the cut the emission of greenhouse gases (GHGs) that will result. To prove that the project will result in real, permanent, verifiable reductions in Greenhouse Gases, proof must be provided in the form of a project design document and activity reports validated by an approved third party in the case of Clean Development Mechanism (CDM) or Joint Implementation (JI) projects.
Reasons for carbon project development
Carbon projects are developed for reasons of voluntary environmental stewardship, as well as legal compliance under a Greenhouse Gas Cap & Trade program. Voluntary carbon (GHG) reducers may wish to monetize reductions in their carbon footprint by trading the reductions in exchange for monetary compensation. The transfer of environmental stewardship rights would then allow another entity to make an environmental stewardship claim. There are several developing voluntary reduction standards that projects can use as guides for development.
Kyoto Protocol
Carbon projects have become increasingly important since the advent of emissions trading under Phase I of the Kyoto Protocol in 2005. They may be used if the project has been validated by a Clean Development Mechanism (CDM) Designated Operational Entity (DOE) according the United Nations Framework Convention on Climate Change. The resulting emissions reductions may become Certified Emissions Reductions (CERs) when a DOE has produced a verification report which has been submitted to the CDM Executive Board.
There may be new project methodology validated by the CDM EB for post phase II Kyoto trading.
United States
In the United States standards similar to those of the Kyoto Protocol schemes are developing around California's AB-32 and the Regional Greenhouse Gas Initiative (RGGI). Offset projects can be of many types, but only those that have proven additionality are likely to become monetized under a future U.S. Cap & Trade program.
One example of such a project, the Valley Wood Carbon Sequestration Project, receives funding from a partnership that was developed by Verus Carbon Neutral that links 17 merchants of Atlanta's Virginia-Highland shopping and dining neighborhood retail district, through the Chicago Climate Exchange, to directly fund the thousands of acres of forest in rural Georgia. The unique partnership established Virginia-Highland as the first Carbon-Neutral Zone in the United States.
Operation
An entity whose greenhouse gas emissions are capped by a regulatory program has three choices for complying if they exceed their cap. First, they could pay an alternative compliance measure or "carbon tax", a default payment set by the regulatory body. This choice is usually the least attractive given the ability to comply by trading.
The second option is to purchase carbon credits within an emissions trading scheme. The trade provides an economic disincentive to the polluter, while providing an incentive to the less polluting organisation. As fossil fuel generation becomes less attractive it will be increasingly unattractive to exceed a carbon cap because the financial disincentive will grow via market forces. The price of a carbon allowance would go up because supply would decline while demand stays constant (assuming a positive growth rate for energy consumption).
The final option is to invest in a carbon project. The carbon project will result in a greenhouse gas emission reduction which can be used to offset the excess emissions generated by the polluter. The financial disincentive to pollute is in the form of the capital expenditure to develop the project or the cost of purchasing the offset from the developer of the project. In this case the financial incentive would go to the owner of the carbon project.
Project selection
The most important part of developing a carbon project is establishing and documenting the additionality of the project - that the carbon project would not have otherwise occurred. It is also essential to document the measurement and the verification methodology applied, as outlined in the project development document.
Developing a carbon project is appropriate for renewable energy projects such as wind, solar, low impact-small hydro, biomass, and biogas. Projects have also been developed for a wide variety of other emissions reductions such as reforestation, fuel switching, carbon capture and storage, and energy efficiency.
From http://en.wikipedia.org/
Reasons for carbon project development
Carbon projects are developed for reasons of voluntary environmental stewardship, as well as legal compliance under a Greenhouse Gas Cap & Trade program. Voluntary carbon (GHG) reducers may wish to monetize reductions in their carbon footprint by trading the reductions in exchange for monetary compensation. The transfer of environmental stewardship rights would then allow another entity to make an environmental stewardship claim. There are several developing voluntary reduction standards that projects can use as guides for development.
Kyoto Protocol
Carbon projects have become increasingly important since the advent of emissions trading under Phase I of the Kyoto Protocol in 2005. They may be used if the project has been validated by a Clean Development Mechanism (CDM) Designated Operational Entity (DOE) according the United Nations Framework Convention on Climate Change. The resulting emissions reductions may become Certified Emissions Reductions (CERs) when a DOE has produced a verification report which has been submitted to the CDM Executive Board.
There may be new project methodology validated by the CDM EB for post phase II Kyoto trading.
United States
In the United States standards similar to those of the Kyoto Protocol schemes are developing around California's AB-32 and the Regional Greenhouse Gas Initiative (RGGI). Offset projects can be of many types, but only those that have proven additionality are likely to become monetized under a future U.S. Cap & Trade program.
One example of such a project, the Valley Wood Carbon Sequestration Project, receives funding from a partnership that was developed by Verus Carbon Neutral that links 17 merchants of Atlanta's Virginia-Highland shopping and dining neighborhood retail district, through the Chicago Climate Exchange, to directly fund the thousands of acres of forest in rural Georgia. The unique partnership established Virginia-Highland as the first Carbon-Neutral Zone in the United States.
Operation
An entity whose greenhouse gas emissions are capped by a regulatory program has three choices for complying if they exceed their cap. First, they could pay an alternative compliance measure or "carbon tax", a default payment set by the regulatory body. This choice is usually the least attractive given the ability to comply by trading.
The second option is to purchase carbon credits within an emissions trading scheme. The trade provides an economic disincentive to the polluter, while providing an incentive to the less polluting organisation. As fossil fuel generation becomes less attractive it will be increasingly unattractive to exceed a carbon cap because the financial disincentive will grow via market forces. The price of a carbon allowance would go up because supply would decline while demand stays constant (assuming a positive growth rate for energy consumption).
The final option is to invest in a carbon project. The carbon project will result in a greenhouse gas emission reduction which can be used to offset the excess emissions generated by the polluter. The financial disincentive to pollute is in the form of the capital expenditure to develop the project or the cost of purchasing the offset from the developer of the project. In this case the financial incentive would go to the owner of the carbon project.
Project selection
The most important part of developing a carbon project is establishing and documenting the additionality of the project - that the carbon project would not have otherwise occurred. It is also essential to document the measurement and the verification methodology applied, as outlined in the project development document.
Developing a carbon project is appropriate for renewable energy projects such as wind, solar, low impact-small hydro, biomass, and biogas. Projects have also been developed for a wide variety of other emissions reductions such as reforestation, fuel switching, carbon capture and storage, and energy efficiency.
From http://en.wikipedia.org/
Carbon emissions reporting
Businesses worldwide face pressure to reduce the impact their activities have upon the environment, and in particular the volume of greenhouse gases they produce.
In the United Kingdom, Department for Environment, Food and Rural Affairs (Defra) has described climate change as the "greatest environmental challenge facing the world today". Although there is currently no legislation in place in the UK forcing companies to reduce carbon emissions, tax benefits and consumer pressure provide a strong incentive for businesses to develop environmental strategies. Emissions trading is the primary tool advocated by the UK Government for tackling global climate change, a method which aims to tackle emissions reduction at the points where there is the lowest cost for doing so. For emissions trading to work, a uniform method of reporting is necessary to allow for comparisons to be made across organisations. Kilograms of CO2 is the preferred unit of measurement for emissions and Defra have developed conversion tables which provide a standard CO2 cost for typical business activities, allowing organisations to report on the volume of CO2 they produce. This article describes the various methods by which businesses and organisations can report on their carbon emissions.
From http://en.wikipedia.org/
In the United Kingdom, Department for Environment, Food and Rural Affairs (Defra) has described climate change as the "greatest environmental challenge facing the world today". Although there is currently no legislation in place in the UK forcing companies to reduce carbon emissions, tax benefits and consumer pressure provide a strong incentive for businesses to develop environmental strategies. Emissions trading is the primary tool advocated by the UK Government for tackling global climate change, a method which aims to tackle emissions reduction at the points where there is the lowest cost for doing so. For emissions trading to work, a uniform method of reporting is necessary to allow for comparisons to be made across organisations. Kilograms of CO2 is the preferred unit of measurement for emissions and Defra have developed conversion tables which provide a standard CO2 cost for typical business activities, allowing organisations to report on the volume of CO2 they produce. This article describes the various methods by which businesses and organisations can report on their carbon emissions.
From http://en.wikipedia.org/
Thursday, December 10, 2009
Carbon profiling
Carbon profiling is a mathematical process that calculates how much Carbon Dioxide is put into the atmosphere from 1msq of space in a building over 1 year.
The metric analysis this in two parts, 1 operational carbon emissions and 2 embodied carbon emissions, which are then added together to produce an overall figure which is termed the ‘Carbon Profile’.
Embodied Carbon Emissions relate to the amount of Carbon Dioxide emitted into the atmosphere from creating and maintaining the materials that form the building eg the carbon dioxide released from the baking of bricks or smelting or iron. In the Carbon Profiling Model these emissions are measured in ECE’s (Embodied Carbon Efficiency) in KgCO2/msq/year
Occupational Carbon Emissions relate to the amount of Carbon Dioxide emitted into the atmosphere from the direct use of energy to run the building e.g. the heating or electricity used by the building over the year. In the Carbon Profiling Model these emissions are measured in BER’s (Building Emission Rate) in KgCO2/msq/year.
The BER is a United Kingdom government accepted unit of measurement that comes from an approved calculation process called sBEM (Simplified Building Emission Model)
The purpose of Carbon Profiling is to provide a method of analyzing and comparing both operational and embodied carbon emissions at the same time. With this information it is then possible to allocate a projects resources in such a way to minimize the total amount of Carbon Dioxide emitted into the atmosphere through the use of a given piece of space.
A secondary benefit is that having quantified the Carbon Profiling of different buildings it is then possible to make comparisons and rank buildings in term of their performance. This allows investors and occupiers to identify which building are good and bad carbon investments.
Simon Sturgis and Gareth Roberts of Sturgis Associates in the United Kingdom originally developed ‘Carbon Profiling’ in December 2007.
Carbon Profiling
From http://en.wikipedia.org/
The metric analysis this in two parts, 1 operational carbon emissions and 2 embodied carbon emissions, which are then added together to produce an overall figure which is termed the ‘Carbon Profile’.
Embodied Carbon Emissions relate to the amount of Carbon Dioxide emitted into the atmosphere from creating and maintaining the materials that form the building eg the carbon dioxide released from the baking of bricks or smelting or iron. In the Carbon Profiling Model these emissions are measured in ECE’s (Embodied Carbon Efficiency) in KgCO2/msq/year
Occupational Carbon Emissions relate to the amount of Carbon Dioxide emitted into the atmosphere from the direct use of energy to run the building e.g. the heating or electricity used by the building over the year. In the Carbon Profiling Model these emissions are measured in BER’s (Building Emission Rate) in KgCO2/msq/year.
The BER is a United Kingdom government accepted unit of measurement that comes from an approved calculation process called sBEM (Simplified Building Emission Model)
The purpose of Carbon Profiling is to provide a method of analyzing and comparing both operational and embodied carbon emissions at the same time. With this information it is then possible to allocate a projects resources in such a way to minimize the total amount of Carbon Dioxide emitted into the atmosphere through the use of a given piece of space.
A secondary benefit is that having quantified the Carbon Profiling of different buildings it is then possible to make comparisons and rank buildings in term of their performance. This allows investors and occupiers to identify which building are good and bad carbon investments.
Simon Sturgis and Gareth Roberts of Sturgis Associates in the United Kingdom originally developed ‘Carbon Profiling’ in December 2007.
Carbon Profiling
From http://en.wikipedia.org/
Carbon offset
A carbon offset is a financial instrument aimed at a reduction in greenhouse gas emissions. Carbon offsets are measured in metric tons of carbon dioxide-equivalent (CO2e) and may represent six primary categories of greenhouse gases. One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases.
There are two markets for carbon offsets. In the larger, compliance market, companies, governments, or other entities buy carbon offsets in order to comply with caps on the total amount of carbon dioxide they are allowed to emit. In 2006, about $5.5 billion of carbon offsets were purchased in the compliance market, representing about 1.6 billion metric tons of CO2e reductions.
In the much smaller, voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources. For example, an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel. Many companies offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related with their product or service purchase (such as offsetting emissions related to a vacation flight, car rental, hotel stay, consumer good, etc). In 2008, about $705 million of carbon offsets were purchased in the voluntary market, representing about 123.4 million metric tons of CO2e reductions.
Offsets are typically achieved through financial support of projects that reduce the emission of greenhouse gases in the short- or long-term. The most common project type is renewable energy, such as wind farms, biomass energy, or hydroelectric dams. Others include energy efficiency projects, the destruction of industrial pollutants or agricultural byproducts, destruction of landfill methane, and forestry projects. Some of the most popular carbon offset projects from a corporate perspective are energy efficiency and wind turbine projects.
Carbon offsetting has gained some appeal and momentum mainly among consumers in western countries who have become aware and concerned about the potentially negative environmental effects of energy-intensive lifestyles and economies. The Kyoto Protocol has sanctioned offsets as a way for governments and private companies to earn carbon credits which can be traded on a marketplace. The protocol established the Clean Development Mechanism (CDM), which validates and measures projects to ensure they produce authentic benefits and are genuinely "additional" activities that would not otherwise have been undertaken. Organizations that are unable to meet their emissions quota can offset their emissions by buying CDM-approved Certified Emissions Reductions.
Offsets may be cheaper or more convenient alternatives to reducing one's own fossil-fuel consumption. However, some critics object to carbon offsets, and question the benefits of certain types of offsets.
Offsets are viewed as an important policy tool to maintain stable economies. One of the hidden dangers of climate change policy is unequal prices of carbon in the economy, which can cause economic collateral damage if production flows to regions or industries that have a lower price of carbon - unless carbon can be purchased from that area, which offsets effectively permit, equalizing the price.
From http://en.wikipedia.org/
Carbon credit
Carbon credits are a key component of national and international attempts to mitigate the growth in concentrations of greenhouse gases (GHGs). One Carbon Credit is equal to one ton of Carbon Dioxide or in some markets Carbon Dioxide equivalent gases. Carbon trading is an application of an emissions trading approach. Greenhouse gas emissions are capped and then markets are used to allocate the emissions among the group of regulated sources. The idea is to allow market mechanisms to drive industrial and commercial processes in the direction of low emissions or less "carbon intensive" approaches than are used when there is no cost to emitting carbon dioxide and other GHGs into the atmosphere. Since GHG mitigation projects generate credits, this approach can be used to finance carbon reduction schemes between trading partners and around the world.
There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. These carbon offsetters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects. The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is reflected in their price; voluntary units typically have less value than the units sold through the rigorously-validated Clean Development Mechanism.
There are two distinct types of Carbon Credits: Carbon Offset Credits (COC's) and Carbon Reduction Credits (CRC's). Carbon Offset Credits consist of clean forms of energy production, wind, solar, hydro and biofuels. Carbon Reduction Credits consists of the collection and storage of Carbon from our atmosphere through biosequestration (reforestation, forestation), ocean and soil collection and storage efforts. Both approaches are recognized as effective ways to reduce the Global Carbon Emissions "crises".
From http://en.wikipedia.org/
There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. These carbon offsetters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects. The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is reflected in their price; voluntary units typically have less value than the units sold through the rigorously-validated Clean Development Mechanism.
There are two distinct types of Carbon Credits: Carbon Offset Credits (COC's) and Carbon Reduction Credits (CRC's). Carbon Offset Credits consist of clean forms of energy production, wind, solar, hydro and biofuels. Carbon Reduction Credits consists of the collection and storage of Carbon from our atmosphere through biosequestration (reforestation, forestation), ocean and soil collection and storage efforts. Both approaches are recognized as effective ways to reduce the Global Carbon Emissions "crises".
From http://en.wikipedia.org/
Wednesday, December 9, 2009
Carbon emission trading
Carbon emissions trading is emissions trading specifically for carbon dioxide (calculated in tonnes of carbon 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 HArba..
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:
* An assigned amount unit (AAU) issued by an Annex I Party on the basis of its assigned amount pursuant to Articles 3.7 and 3.8 of the Protocol.
* A removal 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.
* An emission reduction unit (ERU) generated by a joint implementation project under Article 6 of the Kyoto Protocol.
* A certified emission reduction (CER) generated from a clean 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)[which was itself a 41% increase relative to 2003 (78 mtCO2e).
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. not in citation given The voluntary offset market, by comparison, is projected to grow to about $4bn by 2010.
Twenty three multinational corporations came together in the G8 Climate Change Roundtable, a business group formed at the January 2005 World Economic Forum. The group included Ford, Toyota, British Airways, BP and Unilever. 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. By December 2007 this had grown to encompass 150 global businesses.
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.
Moral tradeoff
With carbon emission trading, there is the rarely discussed concern of moral tradeoff. The idea is exemplified in the study, "A Fine is a Price", conducted by Uri Gneezy and Aldo Rustichini with a selected group of Haifa childcare centers in Israel. The study showed that monetary fines on late-coming parents did not deter the tardy habit and instead, created an unexpected economic and moral tradeoff for the late-coming parents as they could now compensate for their tardiness under the new fine system.
However, this analogy does not take into account an important distinction between late fees at childcare centres and cap-and-trade emissions reduction schemes: the price paid by a late-coming parent has no impact on the price to be paid by other late-coming parents. That is, there is no bidding system in place where parents compete for the right to arrive late. This contrasts with an emissions trading scheme, where one firm's willingness to pay for carbon emissions reduces the number of permits available to other emitters, thereby increasing scarcity and hence the price of carbon pollution.
From http://en.wikipedia.org/
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 HArba..
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:
* An assigned amount unit (AAU) issued by an Annex I Party on the basis of its assigned amount pursuant to Articles 3.7 and 3.8 of the Protocol.
* A removal 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.
* An emission reduction unit (ERU) generated by a joint implementation project under Article 6 of the Kyoto Protocol.
* A certified emission reduction (CER) generated from a clean 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)[which was itself a 41% increase relative to 2003 (78 mtCO2e).
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. not in citation given The voluntary offset market, by comparison, is projected to grow to about $4bn by 2010.
Twenty three multinational corporations came together in the G8 Climate Change Roundtable, a business group formed at the January 2005 World Economic Forum. The group included Ford, Toyota, British Airways, BP and Unilever. 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. By December 2007 this had grown to encompass 150 global businesses.
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.
Moral tradeoff
With carbon emission trading, there is the rarely discussed concern of moral tradeoff. The idea is exemplified in the study, "A Fine is a Price", conducted by Uri Gneezy and Aldo Rustichini with a selected group of Haifa childcare centers in Israel. The study showed that monetary fines on late-coming parents did not deter the tardy habit and instead, created an unexpected economic and moral tradeoff for the late-coming parents as they could now compensate for their tardiness under the new fine system.
However, this analogy does not take into account an important distinction between late fees at childcare centres and cap-and-trade emissions reduction schemes: the price paid by a late-coming parent has no impact on the price to be paid by other late-coming parents. That is, there is no bidding system in place where parents compete for the right to arrive late. This contrasts with an emissions trading scheme, where one firm's willingness to pay for carbon emissions reduces the number of permits available to other emitters, thereby increasing scarcity and hence the price of carbon pollution.
From http://en.wikipedia.org/
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