The trading of permits (carbon credits) to emit carbon dioxide and other greenhouse gases. A provision of the Kyoto Protocol was that nations should be compensated for retaining or increasing the size of their forests in particular, and (by extension), to other methods of carbon sequestration. Because trees remove carbon dioxide from the atmosphere and incorporate carbon into their tissues, nations that increase their forested area are awarded credits that may be set against their individual targets for the reduction in carbon dioxide emissions. In addition, countries whose emissions are below the established levels are able to trade credits with countries that are unable to meet their greenhouse-gas reduction targets.
Although trading has already commenced, there are still serious scientific reservations about the extent to which forests sequestrate carbon dioxide, and for how long. Other proposed methods, such as the ‘seeding’ of tropical waters with iron to encourage the growth of phytoplankton (photosynthetic plankton), have even greater scientific uncertainties. Only geological and oceanic sequestration are currently apparently free from such problems. Despite this, carbon trading is generally viewed as a valid method of encouraging a reduction in carbon-dioxide emissions or, at least, an initial step in this process.
At present the only mandatory trading scheme is that instituted by the European Union, the European Carbon Exchange (ECX). Other, non-mandatory trading schemes include the Chicago Climate Exchange (CCX) and the Asia Carbon Exchange (ACX). In April 2007, the United Nations Climate Change Secretariat launched a global carbon exchange, the International Transaction Log (ITL), to allow developing nations to sell pollution reduction credits—called Certified Emission Reductions (CER)—to rich nations, which may then count these credits towards their greenhouse-gas emissions targets under the Kyoto Protocol, from 2008–12.
Subjects: Meteorology and Climatology.