The Azimuth Project
Carbon trading (Rev #7, changes)

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Carbon trading is a form of emissions trading that specifically targets carbon dioxide. This form of permit trading is used by some countries utilize in order to meet their obligations specified by the Kyoto Protocol?, namely, the reduction of carbon emissions. There are also sub-national entities engaged in carbon trading.


Trading size

According to Wikpedia:

Carbon emissions trading is emissions trading specifically for carbon dioxide (calculated in tonnes of carbon dioxide equivalent or tCO2e) and currently makes up the bulk of emissions trading. It is one of the ways countries can meet their obligations under the Kyoto Protocol to reduce carbon emissions and thereby mitigate global warming.

Carbon emissions trading has been steadily increasing in recent years. According to the World Bank’s Carbon Finance Unit, 374 million metric tonnes of carbon dioxide equivalent (tCO2e) were exchanged through projects in 2005, a 240% increase relative to 2004 (110 mtCO2e)[93] which was itself a 41% increase relative to 2003 (78 mtCO2e).[94] In terms of dollars, Felipe de Jesus Garduño Vazquez uses the World Bank has estimated that the size of the carbon market was 11 billion USD in 2005, 30 billion USD in 2006,[93] and 64 billion in 2007.


23 multinational corporations came together in the G8 Climate Change Roundtable, a business group formed at the January 2005 World Economic Forum. The group included Ford, Toyota, British Airways, BP and Unilever. On June 9, 2005 the Group published a statement stating that there was a need to act on climate change and stressing the importance of market-based solutions. It called on governments to establish “clear, transparent, and consistent price signals” through “creation of a long-term policy framework” that would include all major producers of greenhouse gases. By December 2007 this had grown to encompass 150 global businesses.




On Thursday December 16th, 2010, California’s Air Resources Board began a cap and trade system for carbon. This system will implement the state’s law mandating that carbon emissions be reduced back to 1990 levels by 2020. This will amount to a 15% decrease from current emissions.

The system will let greenhouse gas emitters buy and sell emission allowances. It covers everyone who emits more than 5,000 tons of carbon dioxide per year. That’s about 360 businesses, who taken together emit about 85% of the CO2.

At first these business will receive free allowances that cover most of their emissions, but as time passes, they’ll have to buy those allowances through quarterly auctions. According to the plan, there will be two phases. By 2012, all major industrial sources and utilities will be covered. By 2015, distributors of fuels and natural gas will also be included.

The chair of the Air Resources Board, Mary Nichols, gave a speech. Among other things, she said:

This program is the capstone of our climate policy, and will accelerate California's progress toward a clean energy economy. It rewards efficiency and provides companies with the greatest flexibility to find innovative solutions that drive green jobs, clean our environment, increase our energy security and ensure that California stands ready to compete in the booming global market for clean and renewable energy.

Western Climate Initiative

California is not alone in its plan to institute carbon trading. By the time the program gets rolling in 2012, California plans to have built a framework for carbon trading with New Mexico, British Columbia, Ontario and Quebec — some of its partners in the Western Climate Initiative:

The green states and provinces are the ‘partners’; the blue ones are the ‘observers’.

Regional Greenhouse Gas Initiative

Furthermore, ten states of the U.S. — New York, New Jersey, Delaware, Maryland and the New England states — have started up another system, the Regional Greenhouse Gas Initiative, which covers only electric utilities. They are already doing auctions.


The benefits of carbon trading are hotly debated. For example, here is a critique:


category: carbon, organizations