FASHION AND MODE

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Carbon trading emerged as a regulatory mechanism to check CO2 emissions, and it has increasingly caught the fancy of governments and industries across the world. In carbon trading, carbon credits are bought and sold by companies and organizations throughout the globe under the innovative cap-and-trade system, where one credit permits the emission of an equivalent of one thousand kilos of carbon dioxide and other greenhouse gases to the environment.

Global emission allowances have been capped by the Kyoto protocol, and the caps are allocated as carbon credits to each operator, who gets a certain amount of these credits that can be consumed or traded in the market. Organizations that feel they may cross the emission limits can purchase these credits from low-emission industries that have extra credits with them because of adopting eco-friendly methods of doing business. As high-emission companies are made to pay for their act, they are driven to opt for greener technologies.

Market trends in carbon trading indicate that it has turned into the greenhouse gases emission-lowering mechanism of choice for a lot of big corporations throughout the globe. This is because such inter-company dealings help in their short-term and medium-term strategies.

Carbon trading is rising exponentially each year, as per the figures reported by the World Bank’s Carbon Finance Unit. There was a 41% rise in the market between 2003 and 2004, and a huge 240% rise between 2004 and 2005. The London based carbon finance market has also grown at a remarkable rate, which clearly shows that the business of carbon trading is reaping good profits for several organizations in the world. Even though the US did not participate in the Kyoto Protocol, many of its states and organizations have embraced the carbon trading practice. The EU too, with its own carbon trading system, has been actively engaged in carbon trading for a few years now.

However, this system has not seen a favourable reaction from a few parties. Carbon trading is actually aimed at making high-emission organizations invest in more eco-friendly technologies and thereby encouraging development of low emission energy alternatives, which is not materializing because defaulting companies seem to be more interested in buying carbon credits instead of opting for eco-friendly technologies. Hence, carbon trading has been a matter of discussion in many parts of the world, and some specialists are of the opinion that alternatives like taxation on extra carbon emissions is the more suited way to regulate the greenhouse gas emissions.