The world of emissions trading is a confusing one. Its name is, strictly speaking, a misnomer, and it is driven by ecological concerns, overlaid by political machinations and executed within a red-blooded free market trading system.
Put in place by the Kyoto Protocol to reduce developed countries’ greenhouse gasses by 5% from 1990 levels, in two stages by 2008 and 2012, emissions trading refers not to the emissions themselves, but to the trading of rights to emit pollutants into the atmosphere. In Europe, this is governed by the caps on emissions at installations in member states in the EU’s Emissions Trading Scheme.
