Carbon trading was born out of the necessity to decrease greenhouse gas emissions, and has become increasingly popular throughout the world in recent years. Carbon trading is essentially a trade in carbon credits in which each credit permits the buyer to release one tonne of carbon dioxide and other greenhouse gases into the air, and it is the basic trading principle governing the cap-and-trade system as formulated in the Kyoto Protocol.

Global emission allotments have been restricted by the Kyoto protocol, and the caps are distributed as carbon credits to every operator, who gets a particular amount of these credits that can be consumed or transacted in the market. Companies that think they may cross the emission limits can purchase these credits from low-emission industries that have credits left with them because of opting for eco-friendly methods of doing business. As high-emission organizations are forced to compensate for their act, they are driven to opt for greener technologies.

So far carbon trading has been a success, with market reports indicating that several large industries across the world are advocating this emission-lowering solution. This is because carbon trading gives them flexibility in their short-term and medium-term strategies.

If the figures of the World Bank’s Carbon Finance Unit are to be believed, then carbon trading is increasing very rapidly with each passing year. There has been a great increase from 41% to 240% in the carbon trading market between the years 2003 and 2005. The carbon finance market, centred in London, has also seen immense growth, which clearly suggests that the exchange of carbon credits is proving to be a profitable business for many organizations. Despite being out of the Kyoto Protocol list of nations, many states and industries in the US have approved of the carbon credits scheme and have incorporated it in their business. The EU too, with its own carbon trading system, has been actively engaged in carbon trading for a few years now.

However, this system has not received a positive response from some parties. As one of the goals of carbon trading is to encourage the development of greener, low-emission technologies, the immense increase in carbon trading is a reason for worry as it indicates that companies are opting to spend more on the purchase of carbon credits rather than investing in more eco-friendly technologies. Hence, carbon trading has been a matter of debate in several parts of the world, and some specialists are of the belief that options like taxation on excessive carbon emissions is the better way to limit the greenhouse gas emissions.

Discover more about carbon credits and carbon trading and get a deeper understanding on how you can help in saving the environment. This and other unique content ‘carbon trading’ articles are available with free reprint rights.

Tags: business, business management consulting, carbon emission, carbon information, carbon management, carbon offset, Carbon Trading, Environment, marketing

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