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ICBE> About Emissions Trading> Carbon as a Commodity
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Carbon as a Commodity
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The carbon market became possible when over 30 major nations voluntarily
adopted greenhouse gas emission reduction schedules at a
UNFCCC conference in Kyoto, Japan, in
December 1997.
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Suddenly, carbon emissions became a liability and carbon reductions an asset. One
of the provisions in the Kyoto Protocol called for emission reduction trading
using free market mechanisms. Emissions trading would allow national and
international transfer of reductions among players in different industries as a
way to level out costs. A commodities market was born.
Objective
The objective of the United Nations Conference on Climate Change is to "..achieve
stabilization of greenhouse concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic (human) interference with the climate system".
This framework outlines the reduction of greenhouse gas production over time. The
framework also creates greenhouse gas inventory reporting standards, studies the
socio-economic aspects of such a restructuring process, facilitates
technological and informational exchange, etc.
Now, with pilot projects completed and rules and regulations of trade
beginning to become established, the carbon market is gearing up
to take off.
With
your participation, the ICBE can play an important role in creating some of the
instruments to help take on the challenge of managing greenhouse gases
and help finance the shift to clean energy production.
Join us in this opportunity!
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Examples of carbon instruments
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Carbon Credits from equipment upgrades
In this example, an older power plant is upgraded to a clean new one. The new
plant produces less emissions for the same kWh generated, and the difference in
emissions can be turned into emission reduction credits.
Carbon Credits from sequestration activities
Here, carbon credits represent the amount of
carbon stored in a tree. It is measured in metric tons. Carbon dioxide
(CO2) is absorbed (sequestered) by the tree from the air during
photosynthesis. The carbon, or C part, is used by the tree as a building block in
it's cellular structure. The oxygen, or O2 part, is respired as a waste
product.
Carbon Credits from clean energy
Let's say an individual has a solar electric panel on his roof or a wind turbine on
his property. The energy produced by this equipment is energy that didn’t have to
come from the local utility. Say that burning coal generates 70% of the
electricity produced by that utility. This equipment "saved" that amount of coal
from entering the atmosphere.
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Faqs on carbon
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How much is a carbon credit worth?
Is carbon trading the answer to the greenhouse problem?
What is the solution for the greenhouse problem?
Why focus first on carbon dioxide?
What are some of the other greenhouse gases?
Why is it OK to trade carbon credits internationally?
Turning emission reductions into financial products
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