| Emissions Trading is particularly suited to the emissions of greenhouse gases, the gases responsible for global warming, which have the same effect wherever they are emitted. This allows the Government to regulate the amount of emissions produced in aggregate by setting the overall cap for the scheme but gives companies the flexibility of determining how and where the emissions reductions will be achieved.
By allowing participants the flexibility to trade allowances the overall emissions reductions are achieved in the most cost-effective way possible.
Participating companies are allocated allowances, each allowance representing a tonne of the relevant emission, in this case carbon dioxide equivalent. Emissions trading allows companies to emit in excess of their allocation of allowances by purchasing allowances from the market .
Similarly, a company that emits less than its allocation of allowances can sell its surplus allowances. In contrast to regulation which imposes emission limit values on particular facilities, emissions trading gives companies the flexibility to meet emission reduction targets according to their own strategy; for example by reducing emissions on site or by buying allowances from other companies who have excess allowances |
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three regulatory market-based and project-based mechanisms (Emissions trading, JI and CDM) as well as the voluntary market and is aimed at achieving cost effective emissions reductions whilst at the same time contributing to sustainable development. Carbon transactions can be grouped in two main categories:
   
Allowance-based transactions, in which the buyer purchases emissions allowances created and allocated (or auctioned) by regulators under cap-and-trade regimes, such as Assigned Amount Units (AAUs) under the Kyoto Protocol, or EU Allowances (EUAs) under the EU ETS.
Project-based transactions, in which the buyer purchases emission credits from a project that reduces GHG emissions compared with what would have happened otherwise. Some project-based transactions are conducted to meet voluntary targets, but most are ultimately intended for compliance with the Kyoto Protocol or other regulatory regimes.
In cap-and-trade regimes, project-based transactions allow for the creation of new assets that can be used for compliance, above and beyond the initial supply of allowances. For example, Emission Reduction Units (ERUs) created through JI projects and Certified Emission Reductions (CERs) created through CDM projects can both be used to meet obligations under the Kyoto Protocol, in addition to AAUs. There is thus no fundamental difference in quality between allowances and project-based credits, once the latter are issued.
Our expertise in the new low carbon economy market helps developers to generate carbon credits and emitters to manage and purchase carbon credits.
AAUs + CERs + ERUs + RMUs + ECs + VERs = Compliance & Trading opportunities
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EMISSIONS TRADING SCHEME (KYOTO, IET & EU ETS)
The International Emissions Trading (IET) and The European Union Emissions Trading Scheme (EU ETS) are cap and trade programs that specify the level of emission reductions, the deadlines, and methodologies that signatory countries are to achieve. Each government can allocate parts of their Assigned Amount Units (AAUs) to individual companies or sectors; these are termed Emissions Rights, Emissions Quota or Emission Allowances. When a company emits less than it is allocated, that company can trade the surplus of emission rights to other companies, that have a shortage of rights or on the market.
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TRADING UNDER THE CLEAN DEVELOPEMENT MECHANISM
The CDM is a project-based emission reduction programe designed to meet two main objectives: to address the sustainable development needs of the host country, and to increase the opportunities available to parties (developed countries) to meet their reduction commitments. CDM reductions are called Certified Emission Reductions (CERs). The only emission reduction credits that may be used to offset emissions or banked throughout phase 1 and phase 2 of the EU ETS are CERs arising from CDM projects. |
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TRADING UNDER JOINT IMPLEMENTATION JI)
JI is a project-based mechanism developed under the Kyoto Protocol, designed to assist developed countries in meeting their emission reduction targets through joint projects with other developed countries, meaning that JI projects can only be implemented between capped industrialised countries. One or more investors (governments, companies, funds, etc.) will agree with partners in a host country to participate in project activities which generate Emission Reduction Units (ERUs), in order to use them for compliance with targets under the Kyoto Protocol and the IET scheme. The EU ETS will introduce tradable ERUs in the second phase 2008-2010, at the moment they can only be banked.
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AFFORESTATION / REFORESTATION
Removal Units (RMUs). These are emissions stored in forest projects and can be generated and traded under CDM or JI. The EU ETS applies a total restriction or bar on any RMUs, ERUs or CERs generated by projects based on Land Use, Land Use Change & Forestry (LULUCF) activities at least for the 2005-2007 period.
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EMISSION CREDITS
Emission Credits (ECs) are a special type of credit that can, in some national systems, be generated by a company or project developer through the implementation of an emission reduction or savings project, without having an emission obligation. This is the case in the UK. These ECs can be traded nationally and not automatically on the international market.
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VOLUNTARY MARKET
Voluntary markets for emissions reductions that are not compliant with the Kyoto protocol, are available for sale to corporations and individuals who want to offset their emissions for non-regulatory purposes. Emission offsets in this latter category are verified by independent agents, but are not certified by a regulatory authority for use as a compliance instrument, and are commonly referred to as Verified Emission Reductions (VERs).
These carry only the possibility, but not a guarantee, that governments will allow them to be applied against future emission reduction requirements. These so-called "verified emission reductions" (VERs) are not a standardized commodity. While they may eventually become CERs or ERUs, many of these reductions have no secondary market benefits outside of their embedded "green image value" or speculative value.
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Joint Implementation and CDM programs are driven by the understanding that climate change is a global problem, and therefore it does not matter where the emissions reductions are physically achieved. The key consideration is that they occur and are achieved in the most cost- effective way.
renewable energy
You can learn more about the different types of renewable energy and clean technologies available to you by consulting our guides. Our goal is to help you become more energy efficient and save you money by reducing your electricity bills. It is now time to become carbon neutral. Switch Your Energy Source to Renewables Now!
Renewable energy (sources) or RES capture their energy from existing flows of energy, from on-going natural processes, such as sunshine, wind, flowing By using an alternative source of energy and being more energy efficient you can reduce dramaticaly the amout of CO2 you release into the atmosthere and therefore actively participate in helping to prevent climate change and global warming. Finally, the use of clean and renewable energy will help you to reduce your electricity or gas bills and become more energy independent in the event of fuel shortages and increasing oil prices.
Most
renewable forms of energy, other than geothermal and tidal power, ultimately
come from the Sun. Some forms are stored solar
energy such as rainfall and wind power which
are considered short-term solar-energy storage, whereas the
energy in biomass is accumulated
over a period of months, as in straw, or through many years
as in wood. Capturing renewable energy by plants, animals
and humans does not permanently deplete the resource.
Fossil fuels, while theoretically
renewable on a very long time-scale, are exploited at rates
that may deplete these resources in the near future. Renewable
energy resources may be used directly, or used to create other
more convenient forms of energy.
Examples of direct use are
solar ovens, geothermal
heating, and water- and windmills. Examples of indirect use which require energy harvesting are
electricity generation through wind turbines or photovoltaic
cells, or production of fuels such as ethanol from biomass
A parameter sometimes used in renewable energy is the tonne
of oil equivalent (toe). This is equal to 10,000 megacal or
41,868 MJ of energy.
The most common definition is that renewable energy is from
an energy resource that is replaced rapidly by a natural process
such as power generated from the sun or from the wind.
A common misconception among the public is that Hydrogen
and Fuell cell technology is also a renewable energy and
elemental hydrogen is a source of energy, and that there are
"mines" or "reservoirs" of hydrogen to find.
This is simply not true, hydrogen is not a primary source of
energy: it is only an energy storage medium, and must be manufactured
using energy from other sources.
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You can learn more about the different types of renewable energy and clean technologies available to you by consulting our guides. Our goal is to help you become more energy efficient and save you money by reducing your electricity bills. IIt is now time to become carbon neutral. Switch Your Energy Source to Renewables Now! |
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