|
|
|
Emissions or carbon trading (often known as 'cap and trade') is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
|
|
Emissions trading
Emissions trading is a mechanism present in the Kyoto Protocol designed to assist countries to meet their targets.
Basically, it allows developed countries who have exceeded their targets to meet their targets by buying emission reduction allowances or credits (each credit equals one metric tonne of CO2 equivalent) from other developed countries who are under their targets and have emission credits to spare.
If most countries exceed their targets then there will be few emission “allowances” available and the average price will be high. This will stimulate these countries to develop policies and actions to reduce emissions that are cheaper than simply purchasing “allowances” from others. It will be interesting to see what the price of emission allowances will be during the first commitment period.
The New Zealand Government recently announced its plans to introduce an Emissions Trading Scheme (ETS). The scheme will be phased in from 208-2013. For more information click here.
|
|
|
|