1. Emission Trading: A New Commodity

2. Emission Trading in a nutshell…
Emissions trading (ET) is a mechanism that enables countries with legally binding emissions targets to buy and sell emissions allowances among themselves
Under an emissions trading system, the quantity of emissions is fixed (often called a "cap") and the right to emit becomes a tradable commodity. The cap (say 10,000 tons of carbon) is divided into transferable units (10,000 permits of 1 ton of carbon each)

3. How it works
The plan works by capping the amount of total emissions that can be released by one company or business
Put simply, cap and trade is a market-based tool usually used by a state or central government to reduce pollution in the atmosphere. the ‘responsible authorities’ set a limit on allowable emissions, which is gradually lowered over time towards a national reduction target. Permits are issued to companies indicating their right to emit a specific amount of pollution.
If a firm emits less than its quota, it can sell surplus allowances; if it emits more than allowed, it has to buy allowances 

4. Carbon Trading
Carbon credits are an element used to aid in regulation of the amount of gases that are being released into the air. This is part of a larger international plan which has been created in an effort to reduce global warming and its effects.
1 tonne (1 metric ton)= 1000 kilograms

5. Carbon credits can also be bought and sold in international markets at whatever the determined market value for them is.

6. Kyoto Protocol
The Kyoto Protocol is a legally binding agreement that arose out of the UNFCCC to tackle climate change through a reduction of green house gas emissions.
It was adopted in Kyoto, Japan, on 11th December 1997
Its objective was the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent air pollution interference with the climate system

7. Clean Development Mechanisms mechanism whereby a country may purchase emission reductions which arise from projects located in non-Annex (Kyoto) countries. The carbon credits that are generated by a CDM project are called Certified Emission Reductions(CERs), expressed in tons of CO2 equivalent

8. Joint implementation
Emissions trading (ET) is a mechanism that enables countries with legally binding emissions targets to buy and sell emissions allowances among themselves