Emissions trading is an instrument in the drive to reduce greenhouse gas emissions. It should ensure that the emission reductions take place where the cost of the reduction is lowest.
“The Government regulates the amount of emissions produced by setting the overall cap for the scheme but gives companies the flexibility of determining how and where the emissions reductions will be achieved. By allowing participants the flexibility to trade allowances the overall emissions reductions are achieved in the most cost-effective way possible.”
Emissions trading allows companies to emit in excess of their allocation of allowances by purchasing allowances from the market. A company that emits less than its allocation of allowances can sell its surplus allowances.
Buying quotas should lead to reduced emissions, and buying EU-quotas requires a reduction in emission – some firm has to reduce their emissions.
Traders – see example: http://www.carbon-capital.com/
Clean Development Mechanism (CDM) quotas are based on a calculated value of emissions with no active reduction measures required. There is a limit, usually 10%, to the number of CDMs a country can have. Norway has no such limit. The countries involved in CDM trades are usually in the developing world. Norway will buy CDM quotas worth 3.6 billion NOK in 2008
CDM projects needs to be “additional” i.e. would not have been done if it weren´t for the CDM financing.
There are active trading programs in several pollutants. For greenhouse gases the largest is the European Union Trading Scheme.
In the United States there is a national market to reduce acid rain and several regional markets in nitrous oxide. Markets for other pollutants tend to be smaller and more localized.
Critics of emissions trading point to problems of complexity, monitoring, enforcement, and sometimes dispute the initial allocation methods and cap.
Point Carbon: Company delivering analysis and consultancy services, news, tools for buyers and sellers of quotas in the field of CO2.
See also HaldenCoe.com: http://www.forskningsparken.no/HCoE-EN/Climate-and-energy-trading/
Buy private quotas to make yourself carbon neutral: http://www.minkvote.no
The price of carbon dioxide in the European Union has fallen so low it no longer provides an incentive to low-carbon development, and seems unlikely to do so in the near future.
Permits to emit the gas, issued by the EU’s emissions trading scheme (Euets), have tested record lows in the past two weeks and now trade at about €11.80 ($15.12, £10.42), according to analyst Point Carbon. (F.T.)
The world’s energy systems are facing big challenges. The global economy demands more clean energy and the the energy industry must innovate: emissions trading, trading new instruments, understanding the interdependence of different energy and non-energy commodities and instruments, changes in working processes, methods and tools. A competitive emissions and energy trading market must be developed.
11.11.2009 Renewed criticism of the quota market in Europe – it does not work! The system of issuing and pricing quotas does not result in reduced emissions. The number and sizing of quotas seems to be haphazard! It is not clear what the money is used for.
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