Emissions trading is a term you may have heard of but are not sure exactly what it means. This page gives a basic overview of this subject. The idea behind emissions trading is that a governing body sets a limit on specified pollutants that can be emitted in a given period. Permits and credits (or allowances) are then issued to polluting companies which give the right to emit certain amounts. Should the organisation wish/need to emit more than this they are required to purchase credits from companies who are emitting less than their quota.
The idea behind emissions trading is that those companies which can cheaply and easily reduce their emissions will do so in order to profit from selling some of their credits to other participating organisations. Over time, the overall limit should be lowered in order to encourage further reductions in emissions across all companies. In the UK our government works under the European Union Emissions Trading Scheme (EU ETS), which is the world’s only compulsory carbon trading programme and the largest focussing on greenhouse gases. Similar schemes do exist in other parts of the world for a variety of pollutants. Phase one of this emissions trading scheme started in January 2005 and phase two began in January 2008.
It is proposed that there be some changes to the European Union Emissions Trading Scheme with the inclusion of other greenhouse gases and these are changes likely to come in from January 2013 (phase three). Carbon emissions from aviation are also expected to be added to the emissions trading scheme from 2010.
Visit the DEFRA website for more information on emissions trading in the UK.
