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What is Carbon market |
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A carbon market is a market (institution of exchange) where carbon shares are traded (bought and sold). Carbon shares are also known as pollution credits.
Carbon shares represent rights of emission of gases like methane, carbon dioxide and other greenhouse gases. The basic idea is that if companies or nations have to pay for their right to pollute they would engage in less pollution. Carbon market functions with a limit on allowable level of emissions. Polluters who are under this set cap can sell their excess emission rights to those concerns who have crossed this cap. Emission rights are sold as credits or shares. A scarcity of shares in a carbon market will drive up its prices. This will make cost of emissions (via fossil fuel powered traditional means) higher. However there are differences in opinion among environmental experts regarding efficacy of system of carbon markets in process of control of emission of harmful gases.
In later half of year 1997 United Nations created a treaty, which assigned mandatory emission limits to the signatory nations. As per latest available data, around 169 nations
excluding Australia and US have ratified this agreement. Kyoto agreement has also given rise to a host of trading schemes aimed at carbon reduction. Carbon market is also set to become world’s biggest trading market in coming years. It may be noted that the modern day emphasis is on attaining and preserving a green earth. Since industrial production leads to environmental degradation, efforts are on all fronts to achieve a world with minimum pollution levels. Global carbon market has lately become a profitable venture. There has been a surge in investments from big institutional firms in global carbon market, which has piled up substantial capital here. Investments have been in billions. However these kind pf project finances are required to obtain certifications from regulatory authorities like UN.
Foreign currency trading.
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