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C Trading

March 12, 2007

Went out for dinner with one of dad’s clients and his family. Nothing particularly exciting. Picked up one funda concept, though. It’s called Carbon Emissions Trading.

CET is basically nations trading permits to emit CO2 and other greenhouse gases based on the Kyoto Protocol so that we can maintain world emission rates at a constant and so considerably lessen global warming. What actually happens is, each country is given a certain level at which to cap it’s emissions. It then issues emission permits to factories/plant/industrial installations in the country, meaning they can only produce as much carbon emission as they have permits for. The point being, all the industries that can reduce their emissions cost effectively will do and sell their excess credits to those that aren’t able to reduce theirs. I think, trading is applicable between countries as well. Any industry overshooting the emissions limit is heavily penalized. Consequently, a shortage of credits will pull the credit-price up. (Remember the demand/supply curve?) This acts as an incentive for firms to reduce their emissions, so as to not spend on credits and so, hopefully, we’re reducing a lot of the world’s greenhouse gas emissions. Pretty cool no? 😀

But somehow, I think there’s a downside to this. Haven’t read much about it yet. Will read and write later.


Check this out:

Scene: Dinner

Dad (to me): You know, Uncle(referring to present company) has a Porsche at home?
Me: Oh wow! Cool!
Sis: What’s a Porsche?


  1. March 12, 2007 8:55 PM

    EDUCATE ur sis…… :O

  2. EoD permalink
    March 12, 2007 9:22 PM

    Haha! I learnt that in econs.. everything about econs was nice except the marks.. and ya it is a nice concept but some people feel that it is ALLOWING pollution. Each company has an incentive to reduce pollution but total pollution remains constant… so it kind of gives a feeling of condoning it rather than attempting to stamp it out.

    You ll know if u studied econs.. EVERY BLOODY concept/law/theory HAS TO HAVE A DOWNSIDE even if it is minor, irrelevant. In other words, if u cant find anything wrong with a theory, you are wrong!

  3. March 12, 2007 10:43 PM

    yes, yes – i almost fell off my chair when she asked that. *sigh*

    econs is a nice subject! 😀 and i also thought CET sorta allows pollution….but i’m assuming people who formulated the KP aren’t stupid. so am just reading a lil more on it to make sure! 🙂

  4. yogesh permalink
    March 16, 2007 9:12 PM

    she really needs to know what a porsche is…and tell her its like the best car company in the whole wide world

  5. March 16, 2007 9:32 PM

    yep, yep – i’ve told her! 🙂 may be i’ll show her some super-cool pictures too! 😀


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