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Emissions Trading: Difference between revisions
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The birth of the idea of carbon credit currency came with the Kyoto Protocol. One target goal was the “stabilization of greenhouse gas concentration in the atmosphere at a love that would prevent dangerous anthropogenic interference with the climate system”. <ref name=Singhal208> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 208. </ref> | The birth of the idea of carbon credit currency came with the Kyoto Protocol. One target goal was the “stabilization of greenhouse gas concentration in the atmosphere at a love that would prevent dangerous anthropogenic interference with the climate system”. <ref name=Singhal208> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 208. </ref> | ||
One result of this was the “legally binding commitment for the reductions of four greenhouse gases”<ref name=Singhal209> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. | One result of this was the “legally binding commitment for the reductions of four greenhouse gases”<ref name=Singhal209> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 209. </ref> for all member countries. | ||
Another important point which has been regulated in Kyoto were mechanisms like “Emissions Trading, the Clean Development Mechanism and Joint Implementation”<ref name = Singhal209/> | Another important point which has been regulated in Kyoto were mechanisms like “Emissions Trading, the Clean Development Mechanism and Joint Implementation”<ref name = Singhal209/> | ||
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The basic principle of carbon markets is that companies have a limited right to emit greenhouse gases in the atmosphere. The company can use these rights to emit itself or they sell their rights to an another company which has not enough emissions rights. In the consequence companies which have a very clean production can make additional money with the selling of their emissions rights. This is the central point where criminals see a way to make some money with the theft of emissions rights. | The basic principle of carbon markets is that companies have a limited right to emit greenhouse gases in the atmosphere. The company can use these rights to emit itself or they sell their rights to an another company which has not enough emissions rights. In the consequence companies which have a very clean production can make additional money with the selling of their emissions rights. This is the central point where criminals see a way to make some money with the theft of emissions rights. | ||
In the literature have carbon markets the following definition in general: | In the literature have carbon markets the following definition in general: | ||
„Carbon markets are primarily aimed at dealing with the problem of increasing concentrations of greenhouse gases in the atmosphere due to human activities. Carbon markets can also be attributed to technological and industry development, as well as a new area for employment growth.“ <ref | |||
„Carbon markets are primarily aimed at dealing with the problem of increasing concentrations of greenhouse gases in the atmosphere due to human activities. Carbon markets can also be attributed to technological and industry development, as well as a new area for employment growth.“ <ref name=Singhal209/> | |||
To get an impression about the size of this market I will show some figures of the market: | To get an impression about the size of this market I will show some figures of the market: | ||
„The carbon market was valued at $1 billion in 2004 and reached $11 billion during 2005, with $8 billion from EUETS and $3 billion from primary CDM projects. The market reached $31 billion in 2006 and $64 billion in 2007, with $50 billion from EUETS, $7 billion from the primary CDM market, $5 billion from the secondary CDM market, and $2 billion from other markets. The market reached $120 billion in 2008, which is 120 times more than the 2004 figure of $1 billion.“ <ref | „The carbon market was valued at $1 billion in 2004 and reached $11 billion during 2005, with $8 billion from EUETS and $3 billion from primary CDM projects. The market reached $31 billion in 2006 and $64 billion in 2007, with $50 billion from EUETS, $7 billion from the primary CDM market, $5 billion from the secondary CDM market, and $2 billion from other markets. The market reached $120 billion in 2008, which is 120 times more than the 2004 figure of $1 billion.“ <ref name=Singhal209/> | ||
As we see has the market a volume of billions a dollars and it’s a lucrative field of activity for criminal groups. | As we see has the market a volume of billions a dollars and it’s a lucrative field of activity for criminal groups. | ||
To see some details about the basics of this market I will provide the following paragraph about the possibilities of Carbon credits and the emissions trading scheme. | To see some details about the basics of this market I will provide the following paragraph about the possibilities of Carbon credits and the emissions trading scheme. | ||
„Carbon credits are a key component of national and international emissions trading schemes. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. Credits can be used to finance carbon reduction schemes between trading partners and around the world.“ <ref> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 210. </ref> | |||
„Carbon credits are a key component of national and international emissions trading schemes. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. Credits can be used to finance carbon reduction schemes between trading partners and around the world.“ <ref name=Singhal210> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 210. </ref> | |||
And actual is the emission trading scheme is one of the important instruments of the European Union to reduce the greenhouse gasses by 8 percent as they arranged in the Kyoto Protocol. | And actual is the emission trading scheme is one of the important instruments of the European Union to reduce the greenhouse gasses by 8 percent as they arranged in the Kyoto Protocol. | ||
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To show the distribution of the certificates from the governments to the companies I found the following paragraph in the book source: | To show the distribution of the certificates from the governments to the companies I found the following paragraph in the book source: | ||
„Operators of large energy production plants or energy-intensive industrial companies are assigned a predetermined number of emissions certificates by their governments. These initial certificates are free, and authorize the companies to emit a specific amount of CO2. If a company exceeds its allowance it must buy in additional certificates. When a company reduces its emissions, it can sell its excess certificates for profit. Companies face penalties when they do not acquire enough certificates to balance out the CO2 they have emitted.“ <ref | „Operators of large energy production plants or energy-intensive industrial companies are assigned a predetermined number of emissions certificates by their governments. These initial certificates are free, and authorize the companies to emit a specific amount of CO2. If a company exceeds its allowance it must buy in additional certificates. When a company reduces its emissions, it can sell its excess certificates for profit. Companies face penalties when they do not acquire enough certificates to balance out the CO2 they have emitted.“ <ref name=Singhal210/> | ||
The transition to the key issues is: | The transition to the key issues is: | ||
„Carbon credits are a key component of national and international emissions trading schemes. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading.“ <ref | „Carbon credits are a key component of national and international emissions trading schemes. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading.“ <ref name=Singhal210/> | ||
So it’s a key business for companies to reduce their greenhouse gas emissions and to sell their carbon credits to other companies witch need carbon credits because of their high polluting production or realized production extensions. | So it’s a key business for companies to reduce their greenhouse gas emissions and to sell their carbon credits to other companies witch need carbon credits because of their high polluting production or realized production extensions. | ||
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And the major market of the unit it’s the European Union, because much of the greenhouse gases of the world is produced in Europe. So it makes sense to implement it first in this region and make it so to the model region which help to adopt such a system to other regions in the other continents of the world. | And the major market of the unit it’s the European Union, because much of the greenhouse gases of the world is produced in Europe. So it makes sense to implement it first in this region and make it so to the model region which help to adopt such a system to other regions in the other continents of the world. | ||
„The European Union Greenhouse Gas Emission Trading System (EU ETS) is the major market for greenhouse gas (GHG) emission allowances, and is the engine, perhaps even the laboratory, of the global carbon market. Its major achievement is that it helps discover the price of emitting GHGs in Europe. Several exchanges transparently disclose prices at which allowances change hands: for example, the EU emission allowance (EUA) for December 2008 delivery has traded in the €20–25 price band since May 2007.“ <ref> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 213. </ref> | „The European Union Greenhouse Gas Emission Trading System (EU ETS) is the major market for greenhouse gas (GHG) emission allowances, and is the engine, perhaps even the laboratory, of the global carbon market. Its major achievement is that it helps discover the price of emitting GHGs in Europe. Several exchanges transparently disclose prices at which allowances change hands: for example, the EU emission allowance (EUA) for December 2008 delivery has traded in the €20–25 price band since May 2007.“ <ref name=Singhal213> Singhal, N., & Gupta, H. (2011). Carbon Credit Currency for the Future. In W. Leal Filho, The Economic, Social and Political Elements of Climate Change. Berlin, Heidelberg: Springer-Verlag, p. 213. </ref> | ||
The book also deliver figures about the value of this market for the year 2007 and 2008. | The book also deliver figures about the value of this market for the year 2007 and 2008. | ||
„The European emission trading market rise in terms of value during 2008 reached US$94,971.7 million; the 2007 figure was US$50,097 million.“ <ref | „The European emission trading market rise in terms of value during 2008 reached US$94,971.7 million; the 2007 figure was US$50,097 million.“ <ref name=Singhal213/> | ||
===Is emissions allowance market usefull?=== | ===Is emissions allowance market usefull?=== | ||