Carbon Trading

CARBON TRADING

Emissions trading is a market based tool to limit greenhouse gas emissions. The largest carbon market in the world, the European Union Emissions Trading System. It includes approximately 12,000 installations in the European Union.

Each Member State shall establish its own emission based on international and national emission reduction targets. Countries then distribute permits called EU allowances to individual companies, which together represent the lid. Companies that do not have enough allowances to cover their emissions must either make reductions in emissions or buy another firm's spare permits. The allowances can be bought and sold throughout the EU.

The market participants mostly consist of utilities, industrial companies, energy trading houses, hedge funds, banks and speculators.