Emissions trading is made up of all different types of atmospheric financial trading. These include sulfur dioxide, carbon dioxide, nitrogen oxide, energy efficiency, and renewable energy credits as well. In today’s rapidly changing world, emission trading is one method of speeding up change towards a cleaner environment by using market-based incentives whose application is global.

Green trade organizations aim to secure sustainable supply systems and to ensure benefits to local people from national, regional and international trade. These organizations promote trade practices that adhere to the principles of sustainable development in all its facets: ecological sustainability (use and conservation), economic sustainability (productivity) and social sustainability (equity).

Green trade organizations can help improve access to national and/or international markets for NWFP (non-wood forest producers), especially those in developing countries, and at the same time provide guidance on increasing benefit for their agricultural and forest products. In addition, they can assist in the export of products, thus helping to provide foreign exchange for the home country.

When designed properly, emission trading allows flexibility for emitters without sacrificing the environmental objective of reducing emissions. Emitters can meet their reduction commitments entirely through their own efforts, through buying permits auctioned by the government or unused by another source, or through doing both. Ultimately, emission trading is driven by the desire to minimize costs and maximize profits.

Trading can significantly reduce overall compliance costs for the specific pollutants covered by the trading program if the emissions reductions that take place are the most cost-effective. The trading market functions like any other commodity market, with trade brokers, outside investors interested in the future potential of innovators and established rules of acceptable activity. According to analysts from the International Energy Agency, the use of economic instruments such as domestic and international emissions trading could reduce the costs of complying with emissions targets by up to 50%.

This report on Understanding Emissions Trading Markets: SO2, NOX, CO2, Mercury, looks at the emissions trading industry and analyzes the interactions between CO2 emission trading and markets for electricity produced from renewable energy sources in a liberalized market, including description on how to treat these issues in the electricity system model developed in the Wilmar Project. This report also looks at the basics of renewable trading and what is involved in the processes. While covering the carbon dioxide trading market and the sulfur dioxide trading market, it also takes a closer look at the exchanges involved in emissions trading markets. This is a complete report covering the ABCs of emissions trading.



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Publication Date: May 2007
Publisher: Energy Business Reports