Carbon Trading

What is Carbon Trading? 

Carbon Trading refers to the buying and selling of the right to release carbon dioxide or greenhouse gases into the environment by various countries. The carbon trade across the world began in 1997 with the signing of Kyoto protocol in Japan by 180 countries. The Kyoto protocol called for 38 industrialised countries to reduce their greenhouse gas emission.  

Growing environmental pollution across the world has been a cause of concern to everyone. Rapid development and industrialisation have only added to the problem. Carbon is an element stored in fossil fuels such as coal and oil when these fuels are burnt, carbon dioxide is released. 

Carbon trading is like any other market trading. Carbon has been given economic value allowing people, companies or nations to trade it. If a company purchases carbon, it gets the right to burn it. Similarly, the country selling it, gives up the right to burn it. The carbon’s value is based on the ability of the carbon owning country to store it and prevent it from release into the atmosphere.