Carbon Market Info

Carbon Market

What is a Carbon Market?

Small-scale emission trading schemes have been around for many years but with the introduction of the Kyoto Protocol the scene was set for industrialised countries to trade emission reduction units on a global scale in order to meet international obligations or to capitalise on excess units. Since the greenhouse gases covered under the Kyoto Protocol can be represented by carbon equivalents the term carbon market is generally used to refer to these evolving emission trading systems.

Under the International Emissions Trading System (IET), countries are able to trade some of their Kyoto assigned emissions budget (AAUs). However in order to improve the efficiency of their emission reduction efforts, several countries have set up (or are in the process of setting up) internal market-based emission trading schemes. The EU Emission Trading Scheme which was established in January 2005 is the most prominent such scheme.