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GHG Emission Trading

What is Carbon Trade?

Carbon trade is an idea presented in response to the Kyoto Protocol that involves the trading of greenhouse gas (GHG) emission rights between countries.

For example

If Country A exceeds its capacity of GHG and Country B still has a surplus of its GHG capacity, a monetary agreement is developed between the two countries where Country A pays Country B for the right to use its surplus capacity.
The Kyoto protocol represents those nations who are facing the challenges of reducing greenhouse gases and storing the carbon credits. Any country who finds it difficult to meet its target of GHG reduction can pay the other country to reduce the emission on its behalf. Both parties enter into and agreement on mutual terms and conditions.

What is emission trading?

Emission trading is a market driven program developed for environmental improvement and it allows both the trading parties to buy and sell emissions or credit for emission reduction of many pollutants.

emission trading program helps to formulate the cost effective emission reduction schemes by availing environmental anti emission opportunities that are used to control pollution.

Emissions trading Scheme

After developing environmental scheme, environmental regulator first determines the total number of emissions and these emissions are divided into small units that have to be traded, these small units are referred as credits. Then these credit units are distributed amongst the participants.

Parties involved in the scheme should obtain sufficient number of credits to be emitted. A country who finds it difficult or expensive to emit can sell these credits to others.

Carbon trading scheme brings considerable advantages over lime both in terms of environment and cost. In some cases these trading schemes can offer significant advantages over other regulatory environmental schemes, both in certainity of environmental outcome and the potential to minimize overall compliance cost.

A cap-and-trade system is a system under which government estimates the total amount of pollution that is emitted into the atmosphere by an entire industry. The government creates emission allowances that are bought and sold among the members of that industry. The only requirement members has to met is that they should accurately measure and report all the emissions and those emissions reported by them should be equal to the allowances at the end of the year.

Greenhouse Gas Cap & Trade

Greenhouse Gas Cap & Trade or the European Union Emissions Trading Scheme (EU ETS is a cap and trade program, that came into existence in January 1, 2005 for the all 25 EU member states. Under this scheme more then 12000 installations have been done, which now have a cap on carbon dioxide emission and trading to allowances for those emissions have begun. The second phase of this scheme will be well effective from 2008 and it coincides with the Kyoto Protocol. This phase is expected to last over 5 years from 2008 2012.

Another example of greenhouse gas cap and trade program is the Kyoto Protocol which specifies the level of emission reductions, the deadlines, and methodologies that has to be achieved by all countries who have signed the Kyoto Protocol. The first phase of the Kyoto Protocol is 2008 2012. Flexible mechanisms have been introduced to help and address the GHG emission reduction needs of participating countries.

What is Carbon Credit Trading?

Carbon Credit Trading is a process though which organizations buy carbon credits to have their impact on global warming. Each carbon credit bought by them represents one ton of carbon emissions from the earth's atmosphere.

What is the reason for Carbon Trading?

The core idea behind the carbon trading is the fact that carbon dioxide is released into the air through greenhouse gases emissions, which in turn warming the surface of the earth. Global warming is the leading factor towards the climate change. Carbon Credit trading system is trying to manage that climate change by initiating an emission reduction scheme with a set goal of cutting GHG's reduction by up to 60% by 2050.

The signatory counties of the Kyoto Protocol assume that carbon trading scheme will reward tall organization and government who are taking part in carbon dioxide reduction, and those who are failed to achieve the set goal of GHG emission reduction will be punished. The member countries who have achieved set level of GHG emission reductions will generate carbon credits equal to their emissions. The companies who will not reduce the emission they will then have to purchase credits from the companies who have reduced the emissions. In this way carbon credit trading will bring an increase in the profitability of the environmental oriented companies. All parties are therefore encouraged to reduce carbon emissions.

Experts at Carbon Services help organizations to benefit from Carbon Emission Trading scheme. Our main focus is on initiating Clean Development Mechanism (CDM) projects in developed countries.

Our consultants provide legal, regulatory and advisory services for carbon credit trading.

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