Energy/Emissions Policy Emissions Trading
Lesson 1, Topic 1
In Progress

Emissions Trading

Abdulaziz July 19, 2020
  • a ‘carbon market’ is established to trade ‘emissions’
  1. cap and trade schemes or
  2. credits that pay for, or offset GHG reductions
  • a cap may be set on allowable emissions ie 26-28% below 2005 by 2030)
  • emissions allowances (permits) up to the cap distributed or auctioned distribution of a % of ‘allowances’ (issuing free permits) is often used at the commencement of a scheme to give a ‘soft start’
  • liable entities who do not have enough allowances must either:
    • reduce emissions
    • buy another entities spare permits
    • buy ‘credits’ (offsets)
  • entities with extra allowances/permits can sell them or (under some scenarios) bank them for future use

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