What is Carbon emissions trading (CET)?

Carbon emissions trading (CET) is a process that allows various countries, organisations and corporations to trade their harmful carbon emission limits for credit with other nations and organisations that have not met their carbon emission limits. Most developed countries and some of the highly influential developing countries  approved this system in 1992 when the United Nations Framework Convention on Climate Change (UNFCCC) was presented.

United States in 2001 had backed away from the Kyoto Treaty stating similar restriction but would remain obligated in some regard to the UNFCCC. At least in theory, CET allows one country who might not be maintaining their target to trade credits with others that are well under theirs.

The Environmental Protection Agency (EPA) later on launched a method of emissions trading known as, Online Allowance Transfer System (OATS). It is an online system that allows companies engaged in the sulphur dioxide and nitrogen oxide to record trades directly through the internet without having to file papers with the EPA. No such method yet exists for carbon emissions trading.

The real issue that has resulted from carbon emissions trading is the trading market that has emerged.  Opinions are varied regarding the advisability, and inherent dangers of CET. The International Carbon Bank & Exchange offered insight on CET through its web site.

Emissions trading reduces costs by allowing a field of players to achieve emissions reductions using market mechanisms. Over time, these mechanisms will drive emissions down and finance the shift to clean energy.