Features of Carbon Trading

Features of Carbon Trading

Features of carbon trading may be explained in controlling emission of carbon, right to pollute, buy and selling carbon emission, and carbon price.

1.    Control Emission of Carbon

Carbon emission trading was introduced to control or reduce the emission of carbon. Initially this idea was floated to control carbon emission in the world, later the same idea is to be replicated for other environment polluting gases.

2.    Right to Pullout

Every company has certain limit for pollution. This limit is commonly known as cap for the company, and company can only pullout (emit carbon) up to such limit, and over and above emission is required to be bought from the carbon market.

3.    Buy more pollution

Company would buy more pollution from the companies, which has surplus credit (emitting low carbon than allowed limit). It means a company which has more carbon emission than allowed limit, and then such extra emission would be bought from a company which has low emission than allowed limit.

4.    Carbon Price

Carbon price would be determine by the market forces i.e. demand & supply for carbon emission. It is assumed that high prices of carbon emission would discourage carbon emission and encourage more saving.