Climate Wise - Carbon Emissions -- What Price a Pollution Solution? by Ben Schiller
By most measures, Europe's carbon emissions trading scheme has had a successful start. In its first year -- 2005 -- the scheme transacted a total of 230 million metric tons of CO2, worth about €4 billion. And since January this year, volumes and prices, which reached about €27 a metric ton in March, have been rising steadily. A whole new industry -- of exchanges, brokers, research firms, consultants and publishers -- has been created, seduced by the promise of what is expected to be a multi-billion-euro industry. Under the scheme, the European Union's 25 national governments agree CO2 emissions targets with the European Commission, before apportioning carbon credits to installations in their countries. In the first phase, to the end of 2007, the trading scheme covers about 5,000 EU companies, or 12,000 plants, representing about half of all current CO2 emissions in Europe.
Over time, governments are expected to reduce the number of free carbon credits available, thus forcing companies to pay for extra allowances in a marketplace, or to invest in new technologies to reduce their footprints (and costs).
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