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As concerns over global warming rise, carbon trading has emerged as a domestic and international trading scheme to help reduce emissions. The goal of carbon trading is to neutralize the carbon impact that occurs with increased industry growth, climate changes and energy production.
Carbon credit sellers are those companies that have successfully reduced carbon emissions through the adoption of new technology and/or policy. These companies sell their excess carbon emissions in the form of credits to carbon-producing companies that cannot reduce emissions, like aviation and transportation companies.
With the adoption of the Kyoto protocol, many European nations have mandated carbon emissions allowances, which result in fines and penalties if exceeded. Carbon trading helps these companies stay in compliance with carbon caps, through the purchase of carbon credits as needed.
With the exception of the Regional Greenhouse Gas Iniative (RGGI), no nationwide, mandatory carbon emissions reduction policy exists in the US. Domestically, carbon trading is mostly voluntary and often done to reduce carbon footprints and satisfy consumer demand for environmentally sound business practices. There are financial incentives to the carbon credit seller, however. Carbon is quickly becoming a sought-after commodity as US industries prepare for the eventual move toward nationwide mandatory carbon caps. Many carbon-emitting companies are buying credits now to offset future carbon emissions.
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