2005-1-13
I'm Gwen Outen with the VOA Special English Economics Report.
Carbon trading has its roots in the Kyoto Protocol. This is the
international agreement to reduce levels of industrial gases
believed to cause climate change. Many scientists link warmer
temperatures to carbon dioxide and other pollutants.
One way carbon dioxide enters the atmosphere is when oil and
other carbon-based fuels are burned. Under the Kyoto Protocol,
companies have an allowance. This is the amount of carbon dioxide
they are permitted to release.
Companies can go over their limit. But they must buy credits from
companies that have more than they need. These are companies that
have not used all of their allowance. Each credit permits the holder
to release one ton of carbon into the atmosphere.
Carbon credits have been traded unofficially since two thousand
three. Since then, the price of a credit has risen by about forty
percent. Now, the European Union will require factories and power
stations in the twenty-five member countries to use the system. A
program called the European Emissions Trading Scheme took effect on
January first.
Only companies in industries that produce large amounts of carbon
dioxide must take part in the system. But anyone can buy carbon
credits in financial markets.
Nord Pool, the Nordic Power Exchange, has already begun to trade
carbon credits. The European Climate Exchange, in the Netherlands,
is to officially start trading in February. Euronext and the
European Energy Exchange in Germany have also announced plans to
trade carbon credits.
Experts say the market could grow to nineteen thousand million
dollars by two thousand ten.
A group of companies created the Chicago Climate Exchange in two
thousand three. But carbon trading in the United States is not based
on legal limits, as in Europe.
About one hundred thirty nations have signed the Kyoto Protocol.
The United States has not approved it. This is largely because big
developing countries like China and India are not required to make
the same cuts as wealthier nations.
But enough nations have approved the Kyoto Protocol for the
treaty to take effect next month. It aims to reduce the amount of
carbon dioxide produced in the world to below levels recorded in
nineteen ninety. This is supposed to happen by two thousand twelve.
This VOA Special English Economics Report was written by Mario
Ritter. I'm Gwen Outen.