Carbon Emission Trading

We all are very much aware of global carbon footprint and climate change. These are one of the major  undesirable gifts of modern era. It becomes necessarily important to deal with these issues with the high order of priority so as to ensure the sustainability of nature and humans. One of the practical and fissile solution for these is Carbon Emission Trading.

It works by setting up the upper limit on the emission of greenhouse gases(GHGs) by the emitters. This is easily achieved by converting the external cost of GHGs into monetary units by a proper mechanism.

In an emissions trading system, permits may be traded by emitters who are liable to hold a sufficient number of permits in the system. In layman's language, if an industry emits the lesser amount of GHGs than it is allowed to, it can trade the difference with the industry that is emitting more than its limit. It undoubtedly gives polluters an incentive to reduce their emissions.

Carbon emissions trading has steadily increased 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.

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.

The British organisation Sandbag promotes cancelling carbon credits in order to lower emissions trading caps.

But there exists other side of the coin as well. Developing nations complain that developed nations, with  their relatively much higher financial resources, obtain the permits for their inefficient industrial projects. This leaves lesser permits for the developing nations with their limited financial resources and hence, makes it tougher for them to build the necessary industrial infrastructure and maintain the steady industrial growth, which is of much higher priority for them.

Despite of few criticisms, it can be concluded that carbon emission trading will play a major role in  cutting done the GHG emission significantly in the coming times.