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Emissions Trading

How emission trading came about
Many changes in how Greenhouse Gases (GHG's) are being treated are due to policies proposed at UNFCCC conferences held at Rio de Janeiro, Kyoto, Buenos Aires, and other places. This convention meets to address the growing suspicion that some gases are trapping heat in earth's atmosphere, possibly altering normal climate behavior.
Emissions trading was introduced as a means to lower the global production of greenhouse gases.  Recent US proposals to build capacity for this new sector are the
Climate Stewardship act and other legislation.
Emissions trading does not mean an exemption from reductions. Trading moves an emission reduction from one place to another, while participants report their reduction schedule. A global accounting system keeps track of what trades were made and wether participants are meeting their reduction targets.
How emissions trading is applied
Over 30 countries have agreed to reduce annual greenhouse gas emissions by an average of 7%. These countries (so called Annex countries) can trade ERC's with each other to level out the cost of achieving emission reductions. For example, a country where there is plenty wind can put up turbines, generate large amounts of emissions free energy and sell the reduction credits to a country where there is less wind and possibly higher costs to achieve reductions with similar turbines.
Each country reports yearly to the IPCC its total emissions and emission reductions. If they are on track with their reductions, they maintain trading privileges. If not, penalties or sanctions may be imposed.
Not all countries have committed to emission reduction schedules. These countries are not sure how to achieve reductions and still grow their economies without hurting themselves. To enable reductions in this second group of countries, one-way trades are permitted. For example, a wind-farm is placed in India, and the credits are automatically transferred to Denmark, where the money for the project came from. So bi-lateral trading is OK between the group with emission reduction commitments, and the second group without commitments.
Rules and modalities
Key to emissions trading is keeping track of what is being traded. Rules defining reporting measures, compliance standards etc., are being agreed upon, and soon there will be an internationally recognized game plan.
The ICBE is anticipating this market and documenting RE systems and the emissions they reduce. We expect that many RE producers will be able to claim benefits when domestic and international trading schemes start up.

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