Recently carbon trading is used in environment related papers. I wish to know the importance of it.
There are many carbon trading practices throughout the world. Some are international, some are regional, some are national. So they do exist and they still seem to be popular amongst a variety of policy makers. Unfortunately, the actual implementation and success of these carbon trading policies are not as well done. There are also carbon trading practices that occur within organizations (internal emissions trading systems IETS).
Please read my paper on the subject. It is downloadable.
Carbon is one of the most used fossil energies, with hight environmental impact. China, EEUU and the leader industrial countries show a clear impact of this energy in its energy policies.
The Carbon trading market does not exist as a market.
There is no athomism; no free entry and exit, no omogeneus product; no transparency.
It is only a transaction environment managed by different public organisms of different countries such as USA, Australia, Eu etc. It cannot function. Prices in different countries are too much diversified. They spam from 6-7 US $ to 80-90 US$ around the world. So because there is no free circulation of carbon credits or allowances in the world. Kyoto protocol is one, while ETSs are more than one. The price are shadow or accounting prIces such in the URSS. They do not rappresent indexes of scarcity.
A "clean" project in a developing country (e.g. hydropower) may generate "carbon credits" (through a complicated verification process). These credits may be sold in carbon markets ($x per ton), earning $ that may be used to partially fund the project (this is one importance of it) . However, because of oversupply of carbon credits and falling demand (buyers in developed countries are cutting down emissions, so they don't need to buy so many carbon credits), the price has fallen drastically. So the carbon trading market has gone quiet.
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