Carbon offsets, carbon exchange markets, emissions credits, cap and trade, emissions trading. These assorted terms all describe the various forms of carbon trading, from the individual wishing to offset his or her airline flight, to heavy industry compliance with federally mandated emissions reductions schemes, to the speculator simply plying the market for profit. While the mechanics may differ from one program to the next, the fundamental idea is the same – the commoditization of carbon emissions.
By putting a price on carbon, market forces are brought to bear on the costs of emissions on the environment, sustainability, and human health. Costs that without such a mechanism are simply externalized. But sooner or later these market externalities must be accounted for. When the true costs are assessed through carbon trading, emissions are reduced, and investments in the transition to the coming new energy economy are given priority. Or at least that is the idea. What is the reality?
Follow along with Triple Pundit’s new carbon trading series as we pick the brains of some of the top experts in the field of carbon trading, carbon markets, and emissions reduction programs.