What is trade?


The carbon trade in response to the Kyoto Protocol. Signed in Kyoto, Japan, by some 180 countries in December 1997 the Kyoto Protocol called for 38 industrialized countries to reduce their greenhouse gas emissions between 2008 and 2012 to a level 5.2% lower than in 1990.

Carbon is an element stored in fossil fuels such as coal and oil. When these fuels are burned, carbon dioxide is released and acts as a greenhouse gas.

The idea of trading carbon emissions is very similar to trade securities or products on the market. Carbon is given an economic value, allowing people, companies and States to sell it. If a nation buys carbon, it is buying the rights to burn it, and the nation, selling gas gives up his rights to burn it. The value of carbon is based on the ability of the country to store it or to prevent it entering the atmosphere (better than you deposited, the more you can charge for it).

Trading the carbon market facilitates the purchase and sale of rights to greenhouse gas emissions. Industrialized countries for which reducing emissions is a daunting task, buying emissions rights from another nation whose industries do not produce as much of these gases. The market for carbon is possible because the purpose of the Kyoto Protocol to reduce emissions as a collective.

On the one hand, trade quotas on carbon emissions, looks like a win-win situation: greenhouse gas emissions can be reduced, and in some countries reap economic benefit. On the other hand, critics of the idea to feel some countries use the trade system and the effects of negative. While trade quotas on carbon emissions might have its merits, the controversy surrounding this type of market is inevitable, because it involves finding a compromise between profit, equality and ecological problems. (For associated reading, see: trading carbon: action or distraction?)

Investing stocks online advice #investingstocksonline