Gas talk..

A discussion with a friend on share markets made me stumble on the term ‘carbon emission trading’. A little bit of googling left me very interested.

“Carbon trading involves the trading of permits to emit carbon dioxide (and other greenhouse gases, calculated in tonnes of carbon dioxide equivalent,).It is one of the ways countries can meet their obligations under the Kyoto Protocol to reduce carbon emissions and thereby mitigate global warming.

A country (or group of countries) caps its carbon emissions at a certain level (this is known as cap and trade) and then issues permits to firms and industries that grant the firm the right to emit a stated amount of carbon dioxide over a time period. Firms are then free to trade these credits in a free market. Firms whose emissions exceed the amount of credits they possess will be heavily penalised.

The idea behind carbon trading is that firms that can reduce their emissions at a low cost will do so and then sell their credits on to firms that are unable to easily reduce emissions. A shortage of credits will drive up the price of credits and make it more profitable for firms to engage in carbon reduction. In this way the desired carbon reductions are met at the lowest cost possible to society. ”

Interesting stuff here but is India a part of this Kyoto protocol?

Yes, but funnily exempt from the requirements of the Kyoto Protocol because India and China were not the main contributors to the greenhouse gas emissions during the industrialization period that is believed to be causing today's climate change.

However, critics of Kyoto argue that China, India, and other developing countries will soon be the top contributors to greenhouse gases. Also, without Kyoto restrictions on these countries, industries in developed countries would be driven towards these non-restricted countries, thus there would be no net reduction in carbon.

Life is so complicated right ..but that’s what making it interesting!!

Article Link:
http://en.wikipedia.org/wiki/Carbon_trading
http://en.wikipedia.org/wiki/Kyoto_Protocol