The Environmental Marketplace
Global warming has achieved worldwide acceptance and is recognized as a serious worldwide problem:
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Market-based policies/regulation to reduce emissions of greenhouse gases
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Regulation creates markets.
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Under the Kyoto agreement (and even alongside it) a number of carbon reduction and trading schemes have been established
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GHG’s will be the world's biggest commodity market, and may become the world's biggest market over all. – NY Times
Cap and Trade
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Governments set emissions caps, and companies that beat them can trade their pollution credits to others willing to pay to pollute.
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Over time, the caps are lowered, making it costlier to choose to keep polluting
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Has been successfully used to mitigate Acid Rain and Ozone depletion (SO2/NOx)
The new Environmental Commodities include:
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Carbon Emission Reduction Credits & Allowances (Offset credits)
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Renewable Energy Certificates
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Energy Efficiency & Conservation Certificates
38 countries faced reduction/limitation commitments - overall reduction of 5.2% from 1990 emission levels
Commitments correspond to a GHG reduction of 30%- 40% below “business as usual forecasts” over period 2008 – 2012
U.S. has not ratified and is engaged in voluntary market and state/regional-level activities at this time:
Kyoto Parties also agreed to the notion of “successive commitment periods” but have not agreed on reduction targets:
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