Q: What exactly is the purpose of carbon trading? It seems to me it legitimates the use of carbon in the name of saving it.
Carbon or emission trading, sometimes known as cap and trade, is the name given to an administrative scheme used to control pollution by providing financial incentives to reduce CO2 emissions. Companies and other groups are given credits that represent the right to emit a specific amount, not exceeding a limit imposed by the government or central authority. If the company wants to emit more than their allowance they can buy credits from those who pollute less. (source)
So, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. The idea is to give an economic incentive to reduce emissions at the lowest possible cost to society.
Your scepticism about the scheme is shared by many experts who agree that trading emissions, as a solution to global warming is flawed with problems. Like you, some think that it is a way of allowing polluters in the developed world to shift the burden of making cuts onto factories in the developing world. As many of the companies receiving income from selling their credits then go on to spend it on expanding their factories, the emissions saving is cancelled out. Worse still, emissions trading may have set back the battle against climate change by diverting investment from long-term solutions such as renewable-energy technology.
In theory carbon trading presents real opportunities for new business approaches – an economic driver for a low carbon economy – but it’s a new field, market forces are yet to settle and there are problems with monitoring and enforcement.
As the director of Yale’s Center for Environmental Law and Policy, Dan Esty, says; “Carbon trading is a promising strategy for reducing greenhouse-gas emissions, but the current structures have serious flaws.” (source)
Given current appraisals of the scheme it is tempting to side with it’s detractors, who maintain that the only real winners in emissions trading have been polluting factory owners who can sell menial cuts for massive profits, and the brokers who pocket fees each time a company buys or sells credits.