About Our Industry
Global warming is one of the most serious environmental threats facing the world today. In 1992, various governments adopted the United Nations Framework Convention on Climate Change (UNFCCC), which aims at stabilizing greenhouse gas (GHG) concentrations in the atmosphere.
In 1997, an addition to treaty was added, named the Kyoto Protocol, which set national caps on the emissions of certain industrialized countries (36 nations and the EU). On average, these countries are required to reduce their emissions by 5.2% below their 1990 levels during a 4 year period of 2008-2012. Under Kyoto, there are “flexible mechanisms” that can be used to meet their targets in addition to actually reducing emissions in their own county. They can buy and sell credits under a cap-and-trade system such as the EU Emissions Trading Scheme (EUETS); they can implement projects in another industrialized country (JI or Joint Implementation project); and they can host projects in the other 137 developing counties who have also ratified the Kyoto Accord (CDM or Clean Development Mechanism project) but have no reduction targets themselves.
GHG emissions trading grew out of this Protocol, to allow each country to achieve their goals in the most efficient and cost effective manner. Further information is available below:
While 175 nations have ratified the Kyoto Accord, it is important to note that the United States and Australia have not, and therefore they aren’t bound by the treaty to reduce emissions, and are excluded from hosting CDM or JI projects. That doesn’t mean that they aren’t effected by the Protocol however, since U.S. and Australian companies do business in signatory countries and are therefore bound to their targets, and in many cases also develop and sell emission-reducing products to Kyoto countries.