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December 7th, 2009
11:28 AM ET

Salvation lies in carbon trading

Carbon trading is said to be one way to reduce greenhouse gas emissions.

Carbon trading is said to be one way to reduce greenhouse gas emissions.

Graciela Chichilnisky
Author and architect of the carbon market
Special to CNN

Two market mechanisms within the Kyoto Protocol can help overcome the North-South divide, and help reach a solution between rich and poor nations while overhauling the world's energy industry and creating win-win solutions for the world economy.

The carbon market that I designed and drafted into the Kyoto Protocol is now trading $120 billion annually through the European Union Trading System. It starts by setting firm emission limits and allows those who over emit to compensate those who under emit, so far by $120 billion per year.

This secures a firm lower emission ceiling and provides market flexibility, creating incentives to introduce new clean technologies and products. Through its Clean Development Mechanism (CDM) the carbon market has provided an additional $25 billion investment in clean, productive commercial projects in developing nations that are compensated with tradable carbon credits.

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Filed under: Economy • Environmental issues
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