The Flourishing Carbon Trading Market

Carbon trading came forth as a regulatory method to control CO2 emissions, and it has increasingly caught the attention of governments and organizations across the world. Carbon trading involves the selling and buying of carbon credits, where every single credit permits the emission of one tonne of carbon dioxide and other greenhouse gases to the buyer, and is the key component of the cap-and-trade system in use in many countries which adhere to the Kyoto Protocol.

As per the Kyoto protocol, a cap has been fixed on global emission levels, which are then apportioned into carbon credits, a certain number of which are granted to each member. Organizations that think they may go beyond the emission limits can purchase these credits from low-emission industries that have credits left with them because of opting for cleaner methods of doing business. High-emission operators are discouraged for their high emissions by this penalty for pollution of the environment.

So far market responses on carbon trading have been encouraging, with most large industries throughout the globe opting for this emission-lowering method. This is because carbon trading gives them flexibility in their short-term and medium-term strategies.

Statistics provided by the World Bank’s Carbon Finance Unit confirm that the carbon trading business is increasing at a very rapid rate every year. There was a 41% increase in the market between 2003 and 2004, and a staggering 240% rise between 2004 and 2005. The London based carbon finance market has also grown at an amazing rate, which makes it evident that the method of carbon trading is reaping good profits for many industries in the world. Several states and industries in the US have also opted for carbon trading practices, even though the country is not a signatory to the Kyoto Protocol. Besides, the EU with its own carbon trading system has also been performing a major role in the carbon trading market.

However, there are certain groups who have criticised this policy. The immense growth in the carbon trading business indicates that organizations throughout the globe are actually more willing to buy carbon credits instead of utilizing low emission energy options which has always been one of the objectives of carbon trading. Hence, carbon trading has been a matter of discussion in many parts of the world, and some experts are of the belief that alternatives like taxation on extra carbon emissions is the more suited way to regulate the greenhouse gas emissions.

Discover more about carbon trading and carbon offset and how it can help the environment. Check here for free reprint licence: The Flourishing Carbon Trading Market.

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