World Environment News

Factbox: Carbon trading schemes around the world

Date: 28-Sep-12
Author: Compiled by Nina Chestney

Carbon trading schemes are emerging all over the world as governments try to meet greenhouse gas emissions reduction targets in the fight against climate change.

Thailand and Vietnam this week announced plans to launch emissions trading schemes. The European Union has agreed to link its own carbon market with Australia's scheme in 2018 and has struck a deal with China to help with the design and implementation of its emissions trading schemes.

These moves are encouraging small steps towards a potential international scheme in the future, carbon analysts say.

Under cap-and-trade schemes, companies or countries face a carbon limit. If they exceed the limit they can buy allowances from others. They can also buy carbon offsets from outside projects which avoid emissions, often from developing countries.

Following is a list of established and emerging schemes:


1. Kyoto Protocol: Mandatory for 37 developed nations, excluding the United States which never ratified the pact. Launched: 2005. Covers: All six main greenhouse gases. Target: Five percent average cut in 1990 emissions in 2008-2012 first phase. How it works: Rich countries cut greenhouse gases at home or buy emissions rights from one other - if one country stays within its target it can sell the difference to another emitting too much. Or they can buy carbon offsets from projects in developing countries under Kyoto's Clean Development Mechanism.

2. European Union Emissions Trading Scheme. Launched: 2005 Covers: Nearly half of all EU CO2 emissions, 40 percent of greenhouse gas emissions. Mandatory for all 27 EU members, plus Iceland, Liechtenstein and Norway. Target: 21 percent emissions cut below 2005 levels by 2020. How it works: Member states allocate a quota of carbon permits to some 11,000 industrial firms and power plants. The lion's share of permits are currently allocated for free but about half of permits will be auctioned from 2013. More than 3,000 airline operators joined the scheme in 2012. Firms can buy a limited number of U.N.-backed carbon emission offsets if that works out cheaper than cutting their own emissions.

3. New Zealand emissions trading scheme: Launched: 2010. Electricity generators, manufacturers and the transport sector hand over to the government a carbon permit for every second tonne of greenhouse gases they emit. A bill last month postponed indefinitely plans to phase-out free handouts of permits and include agriculture in the scheme.

4. Northeast U.S. states' Regional Greenhouse Gas Initiative (RGGI). Launched: 2009. Covers: Carbon from power plants in nine northeast states. Target: Cut power sector emissions by 10 percent below 2009 levels by 2018.

5. Japan: Tokyo metropolitan trading scheme: Launched: 2010. Covers: Around 1,400 top emitters. Target: Japan aims to cut emissions by 25 percent by 2020 from 1990 levels. How it works: Tokyo city sets emissions limits for large factories and offices which can use technology such as solar panels and advanced fuel-saving devices.

6. Australia domestic emissions reduction scheme. Launched: July 2012. 300 of the biggest polluters, from coal plants to smelters, initially pay A$23($23) per tonne of CO2 emitted. They are banned from using U.N. carbon offsets until the system is replaced by a nationwide carbon trading scheme in July 2015 but can use a limited number of domestic credits. The EU has agreed to link its ETS with Australia's scheme by 2018.


1. Californian scheme. Launch: 2013. Covers: Emissions from power plants, manufacturing and, in 2015, transportation fuels. Target: Cut the state's emissions to 1990 levels by 2020. How it works: Polluters receive 90 percent of permits they need to cover emissions for free at the outset and remaining permits to be offered at quarterly auctions, which begin this November.

2. Western Climate Initiative (WCI). Launch: 2013. Covers: California and Quebec. Target: Cut emissions 15 pct below 2005 levels by 2020. How it works: Polluters such as power plants would have to buy offsets to cover their emissions. Transport included in 2015.

3. South Korea emissions trading scheme. Launch: 2015. Covers: Around 500 companies, collectively responsible for 60 percent of the country's annual emissions. Target: Government has set a 2020 emissions reduction target of 30 percent below forecast "business as usual" levels

4. Mexican voluntary CO2 trading scheme. Launch: Unknown A commission has authority to implement a cap-and-trade system to help regulated sectors meet emissions cut targets which will eventually be set but the creation of a carbon market is not mandatory. Target: Mexico aims to cut emissions by 30 percent from business-as-usual levels by 2020.

5. Taiwan carbon offset scheme. Launch: Unknown. Covers: Nearly 270 companies responsible for more than half of Taiwan's greenhouse gas pollution have agreed to supply emissions data to the government to help it launch a carbon offset scheme. Target: Taiwan aims to cut CO2 to 2005 levels by 2020.

6. India: mandatory energy efficiency trading scheme. Launch: Trading is set to begin in 2014 after a three-year rollout period. Covers: Eight sectors responsible for 54 percent of India's industrial energy consumption. Target: India has pledged a 20-25 percent reduction in emissions intensity from 2005 levels by 2020.

7. China: Pilot carbon trading schemes in seven provinces and cities - Beijing, Chongqing, Guangdong, Hunan, Shanghai, Shenzhen and Tianjin. Launch: Some as early as 2013. They will cover energy production and various energy-intensive industries. Officials have said a national scheme might not emerge this decade as China plans to launch additional test schemes in 2016. Target: Cut CO2 emissions per unit of GDP to 40-45 percent below 2005 levels by 2020.

8. Thailand: voluntary emissions market. Launch: October 2014. Sectors not specified but government said it will discuss emissions targets with participants.

9. Vietnam: national scheme. Launch: By 2018. Details not yet revealed. Target: Cut greehnhouse gas emissions per unit of GDP by 8-10 percent below 2010 levels by 2020.

Sources: Reuters, Thomson Reuters Point Carbon

(Compiled by Nina Chestney; Editing by Catherine Evans)

© Thomson Reuters 2012 All rights reserved

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