'Made in the USA': A short history of carbon trading
Chapter 2 of Carbon Trading:A Critical Conversation on Climate Change, Privatisation and Power
first published 9 October 2006
At the insistence of the United States, carbon trading mechanisms became the centrepiece of the 1997 Kyoto Protocol, the main current international agreement on how to cope with climate change.
Two kinds of trading are involved. First, tradable rights to emit carbon dioxide are handed out to the biggest polluters. Second, companies or industrialised countries can buy additional pollution credits from projects in the South that claim to be emitting less greenhouse gas than they would have without the carbon market investment. Other examples of carbon trading include the European Union Emissions Trading Scheme (EUETS) and private deals to make consumers' activities 'carbon-neutral'.
This second chapter of the book, Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power, sketches how this extraordinary, little-tested, highly-theoretical 'market' approach to the climate problem -- designed principally merely to save industrial polluters money in the short-term -- triumphed politically, in spite of its obvious weaknesses.