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The carbon marketplace |
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The carbon marketplace or carbon emissions trading is a marketplace where carbon dioxide is particularly traded. More than 300 million metric tonnes of carbon dioxide or equivalent was exchanged in 2005.
Carbon marketplace or carbon emissions trading deals particularly with trading of carbon dioxide (CO2) and its equivalents. The trading is part of Kyoto protocol obligations that signatory countries must enforce to minimize global warming.
Units of trading
Carbon emissions trading is measured in terms of units. Each unit is equal to one metric tonne of emissions (in carbon dioxide terms). The unit takes the form of:
- Emission reduction unit (ERU): This unit is generated as a result of joint implementation project in accordance with article 6 of Kyoto protocol.
- Assigned amount unit (AAU): This unit is issued by an Annex I party on the ground of its allotted quantum in accordance with Articles 3.7 and 3.6 of Kyoto protocol.
- Certified emission reduction (CER) generated as a result of Article 12 of Kyoto protocol. A clean development mechanism project acted as a catalyst for this unit.
- Removal unit (RMU) issued on the ground of land use, land use change and forestry (LULUCF )activities in accordance with Articles 3.3 and 3.4 of the Kyoto protocol.
All transfer of units and acquisition of units are to be routed through registry systems as per Kyoto protocol.
Financial aspects
The London financial marketplace is regarded as the center of carbon finance market. The market is estimated to have a value of approximately $60 billion (circa 2007). Green activists strongly support carbon emissions trading for its proven effectiveness to mitigate global warming.
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