Isra-Mart srl : What is carbon trading?

www.isra-mart.com

Isra-Mart SRL news:

Europe has been trading permits to emit carbon dioxide since 2005. The economic concept of the trading scheme is simple but the practice has been fraught with problems.

Policymakers distribute permits to emit carbon to utility companies and heavy industrial polluters. At first these were given out free but now a small proportion is auctioned off by governments and eventually most will be sold in this way. Any allowances not used or extras required may be traded on the open market, as each country gradually reduces the amount of available credits.

Industrial players proved so effective at lobbying that they were showered with extra permits that they did not need in the early years. The UK power sector will make at least an additional €1.3bn (£1.1bn) purely from carbon trading. The recession has only exacerbated the glut as industrial emissions fall, pushing down the price of a carbon credit to €14.

This has meant there is not enough incentive for utility companies to switch from coal or gas to building new nuclear plants or wind farms without state incentives.