Government and Business Case Study

Carbon Trading: A Global Effort to Reduce Pollution

OR

Abstract:
Climatic change is becoming an increasingly important concern for the policy-makers. Therefore, carbon trading had been riding high on the priority list globally. The concept of carbon trading is generically referred to as emission trading. It was one of the flexible mechanisms permitted by the Kyoto Protocol, formed to enable countries to meet their emission reduction targets. Participants in carbon trading bought and sold contractual commitments or certificates that represented specified amounts of carbon-related emissions. This was believed by many people to be the best way to abate total global pollution. However, many economists advocated the carbon tax process over carbon trading. They felt that carbon trading suffered from some inherent weaknesses like more complicated procedures, higher legal and administration costs, etc.

Pedagogical Objectives:

• To discuss the growing problem of global warming.
• To analyse the role of carbon trading in abating pollution.
• To discuss carbon tax as a possible alternative to carbon trading.

Keywords :  Global warming, Kyoto Protocol, Greenhouse gases, Carbon trading, European Union, Emissions trading scheme, Assigned allowance units, Emission caps, Emission reduction units, Clean development mechanism, Joint implementation, Carbon tax, Carbon traders