Cap and Trade
Cap and Trade Sytems: Cap is referring to the limiting of green house gasses. As of 2009 developing countries such as India and China have no limits on greenhouse gas emissions. Trade is the ability to trade your surplus allocated amount of greenhouse gas emissions or purchase desired credits that are above and beyond what your allowance is. This trade can be in the form of aid financed through a middle man such as the World Bank. As reported by Joe Mcdonald (2009), “ Germany contribute(d) to saving the climate-while putting lucrative “carbon credits” into the pockets of Chinese developers”. This growing need for excess carbon credits has created a growing “Global Carbon Market”that is worth over 59 billion dollars (Point Carbon, 2008). The article “Point Carbon; Global carbon Market Worth 59 bn USD”, written for the Energy Business Journal, states “The Global Carbon Market has generated almost as much money in the first half of 2008 as it did throughout the whole 2007. This market is quickly growing and the gross value of the transactions in the first half of 2008 is already a full 94 % of the value for all transactions in 2007. The article states that the average carbon price per ton increased from $21 per ton in 2007 to $32 in 2008. Also, the European Union Emission Trading Scheme is dominating and will continue to grow due to the inclusion of aviation emissions from 2012. Point Carbon goes on to inform that there are several new markets on the horizon including the Regional Greenhouse Gas initiative in the U.S., the Trading Scheme in Alberta, Canada and the upcoming Australian Federal Emission Trading Scheme. The article concludes by announcing that “other developments are in store for 2008 including the issuing of EUA’s by all participating governments” creating spot markets similar to the European Emission Trading Scheme. In the “Global Carbon Market” (Point Carbon, 2008) countries are allowed to trade their unused “carbon credits” (Point Carbon, 2008). A major player in this trading system is the World Bank, “charging a 13 % commission on all of the carbon trades it brokers” (Wysham, 2008). The World Bank provides support to developing counties such as; India and China.