How Carbon Trading Works

1 TON CO2 Without a price on carbon, big polluters don't pay for the CO2 emit. The real cost is borne by the planet in the form of climate change. An example that already exists is the EPA's Acid Rain Program. In a trading scheme, polluters must purchase a permit or an allowance, for every ton of CO2 they get, emit. These can be governmenr-issued or bid for at an auction. The total number of permits are "capped". 1 HOW DOES CARBON 2 TRADING WORKS The hole point of cap-and -trade is to raise the prise of emitting carbon. Her's how. 4 %24 3 The idea is pretty simple the cost creates an incentive across the economy to reduce pollition and invest in cleaner forms of And lo! A market is created. Businesses are now able to trade carbon allowances (permits) on the free market. Companies that need to emit more can buy more permits from those who require less. Classic supply and demand. energy.