Following the creation of the Kyoto treaty, a new market has arisen: trading carbon emissions. Under Kyoto protocol, countries that signed onto the deal promise to cut their greenhouse gas production by such and such a percent between 2008 and 2012. Now, companies and countries have come up with a market strategy to provide themselves with a loophole. By paying someone else to reduce emissions, a country can free itself from its obligation to Kyoto.
It's akin to the time-honored tradition of buying your way out of the draft. Since the heavily publicized purpose of Kyoto is to decrease global warming, after all, the exact location of lowered emissions is unimportant...or at least that's the logic behind the system. A second market has sprung up too, in which companies can acquire credit by helping out a developing country.
Critics say that all this shuffling around doesn't help. It even belittles the grave concerns that brought Kyoto into existence in the first place. However, the idea of trading environmental obligations reaches back to 1970s scares over acid rain. The only difference is that companies traded quotas for sulfur dioxide and nitrous oxide, rather than CO2.
This is a LUCRATIVE business. The World Bank estimates that about 10 billion dollars went into the carbon-trading market last year. No matter how the real emissions work out, brokers and banks get their cut. Oh, did I mention that World Bank itself is now holding $915 million in its carbon finance fund?
Without the US or China tied into Kyoto, the biggest heavy hitters are not yet part of the market--officially. However, you can be sure neither of those countries will miss out on the chance to profit from the carbon trade.
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