A Background to Emissions Trading

Carbon markets have experienced rapid growth, worldwide, as governments, businesses and individuals seek to reduce their greenhouse gas (GHG) emissions. In 2007 over US$64billion was transacted in the carbon markets, representing more than a doubling of volume compared to 2006 (World Bank (2008) “State and Trends of the Carbon Market 2008”).

On an international level, the ratification of the Kyoto Protocol has been the keystone policy driver for inter-governmental emissions trading. Regional schemes have been developed, and individual Governments have taken regulatory action. In areas without Government regulation, voluntary schemes have been established. In short, the international market is thriving.

Carbon markets have the potential to achieve emissions reductions at lowest overall cost. As a result, emissions trading will continue to be an important component of global action against the impacts of climate change.

In Australia, the Federal Government is working to introduce a price on carbon.