Carbon Trading
allows carbon emitters to make up for their carbon emissions
Carbon trading is an attempt to curb human emissions of carbon dioxide (CO2) by creating a market for the emissions as well as their capture and storage. Companies that produce carbon dioxide and other greenhouse gases may offset those emissions by purchasing the equivalent storage of atmospheric carbon in things like tree plantations and man-made storage.
The Kyoto Accord
The Kyoto Protocol sought to reduce greenhouse gas emissions by industrialized nations.
The Kyoto Accord was the first real step in creating a market for carbon emissions. The United Nations Framework Convention on Climate Change, or UNFCCC, is an international treaty established to consider ways to reduce the emission of greenhouse gases and deal with the effects of a warming climate. The Kyoto Protocol is an addition to the UNFCCC treaty that includes legally binding targets for countries that ratified it (signed it and passed it into law). Thirty-seven industrialized countries and the European Union agreed to reduce gas emissions to 1990 levels by 2012. The United States has never signed or ratified the Kyoto Protocol.
Carbon Trading in Europe
The European Union (EU) created the Emissions Trading System (ETS) in 2005 to help meet their Kyoto targets in an economically efficient manner. There are over 10,000 industrial facilities included in the EU that together produce over 50 percent of Europe's greenhouse gas emissions. Emitters purchase licenses to emit greenhouse gases through auctions. Revenues from auctions are then used to find ways to sequester (draw from the atmosphere) carbon gases and store them, and to develop technologies like solar and wind power to further reduce emissions.
The Situation in the United States
The United States never signed the Kyoto Protocol and does not have a binding international commitment to reduce its emissions. It is, however, the world's second largest emitter of greenhouse gases (China took over first place midway through 2010), and the largest and wealthiest nation. While the federal government has not taken a significant stand on curbing emissions, private interests have found ways to create voluntary markets for carbon trading.
The Chicago Climate Exchange
The Chicago Climate Exchange (CCX) is a voluntary greenhouse gas trading platform, and the only one of its kind in North America. Its 400 members are able to trade emissions for carbon offsets, and the CCX monetizes the trading. Carbon offsets are emission credits created by projects that store atmospheric carbon, and they can be used to counterbalance unavoidable emissions in other areas. A forest plantation, for example, can be used to create offsets for sale to another company that wants to cancel out or offset its emissions. Offsets are measured in metric tonnes of carbon, a tonne being 1000 kilograms or about 2205 pounds.
The Voluntary Carbon Standard
The Voluntary Carbon Standard is an international organization formed to provide a global standard for approval of voluntary carbon offsets. Offsets can be purchased by countries, companies or individuals that seek to counter their emissions. Offsetting is meant as a last resort when an emitter cannot reduce their emissions or change their energy use to non-emitting sources like wind power. It provides a way for emitters to balance out their emissions. Voluntary carbon offsets are now offered by many airlines to their customers during the ticket purchase process.
