What are the major international carbon trading schemes?

There are several major international carbon trading schemes that have been established to address the issue of greenhouse gas emissions and climate change. These schemes aim to create a market-based approach to reducing emissions by allowing countries and companies to buy and sell carbon credits or allowances. The major international carbon trading schemes include:

1. European Union Emissions Trading System (EU ETS): The EU ETS is the largest and oldest carbon trading scheme in the world. It covers more than 11,000 power stations and industrial plants in 31 European countries. Under this scheme, a cap is set on the total amount of greenhouse gas emissions allowed, and companies are allocated or can purchase emission allowances. If a company exceeds its allocated allowances, it must buy additional allowances from other companies or face penalties.

2. Kyoto Protocol's Clean Development Mechanism (CDM): The CDM is a project-based mechanism under the Kyoto Protocol, an international treaty aimed at reducing greenhouse gas emissions. It allows developed countries to invest in emission reduction projects in developing countries and receive Certified Emission Reductions (CERs) as credits. These credits can be used to meet their emission reduction targets.

3. Joint Implementation (JI): Similar to the CDM, the JI is another project-based mechanism under the Kyoto Protocol. It allows developed countries to invest in emission reduction projects in other developed countries and receive Emission Reduction Units (ERUs) as credits. These credits can be used to meet their emission reduction targets.

4. California Cap-and-Trade Program: The California Cap-and-Trade Program is the largest carbon trading scheme in the United States. It covers various sectors, including electricity generation, industrial processes, and transportation. Under this program, companies are required to hold a sufficient number of allowances to cover their emissions. They can buy and sell allowances through quarterly auctions or in the secondary market.

5. Regional Greenhouse Gas Initiative (RGGI): The RGGI is a cooperative effort among ten northeastern and mid-Atlantic states in the United States. It is the first mandatory market-based program in the country to reduce greenhouse gas emissions from the power sector. Under this scheme, power plants must hold allowances equal to their emissions, and these allowances can be bought and sold in quarterly auctions.

These major international carbon trading schemes aim to provide economic incentives for reducing greenhouse gas emissions and promote the transition to a low-carbon economy. By creating a market for carbon credits, these schemes encourage companies to invest in cleaner technologies and practices, ultimately contributing to global efforts to mitigate climate change.