Carbon Trading

Carbon trading is a method designed to reduce emissions of carbon dioxide and other greenhouse gases, regulations and economic incentives. In fact, the term "emissions trading" is somewhat misleading, since some gases that could handle the so-called cap and trade system. For this reason, some people prefer the term "system" to the fact that much more than just carbon stress is sold.

This work is part of the system, often called "cap and trade." Under cap and trade system, government at national level compared to the total greenhouse gas emissions in a given period, such as a quarter or a year and then allocate "credits" to companies, enabling them to certain levels of greenhouse gases in order to participate. If companies are not proper for their use can sell or trade these credits to companies that are afraid of their quota.

Emissions trading provides a clear incentive for companies to improve their effectiveness in reducing greenhouse gas emissions that the decrease in physical cash. In addition, ineffective deterrent because enterprises actually penalized for the performance targets for emissions. In this way, regulation is achieved mainly through economic means rather than through draconian governmental measures to encourage people to participate in emissions trading as potential customers.

If emissions trading policy includes general effort to reduce carbon emissions in a country longer, which means that each year the number of points is limited.Encourage companies to become more efficient in time, the government is often easier to achieve targets for reducing emissions, but companies are expected to practice at night and the change in emissions trading allows for more flexibility than what was originally put blanket level.

In some countries, opened a carbon pool, work on multiple exchanges. These institutions facilitate the exchange of carbon credits, and so well by the market and offer a standard set of cost of credit on the basis of demand and general economic health. In some cases, individuals and participation in emissions trading, to purchase credits against their emissions of greenhouse gases, and some fans believe that emissions trading should be formally extended to all residents and strengthen comprehensive, individual commitments to reduce greenhouse gases.