Bio. Res.
Today 2023, 5(8):614-616
Biotica Research Today
Article ID: RT1414
Harnessing Carbon Trading: A Catalyst for Global Climate
Conventions
Ghazanfer Abbas1*, Ankush S. Gadge2, Deepshikha Singh3, Rajput Nikhil Balu4 and
Akshay F. Madiwalar3
1
Dept. of Silviculture & NRM, 2Dept. of Sericulture, 3Dept. of Agroforestry, 4Dept. of Forest Products and Wildlife, Forest College
and Research Institute, Tamil Nadu Agricultural University, Mettupalayam, Tamil Nadu (641 301), India
Open Access
Corresponding Author
Ghazanfer Abbas
: abbasrizvi2602@gmail.com
Conflict of interests: The author has declared that no conflict
of interest exists.
How to cite this article?
Abbas et al., 2023. Harnessing Carbon Trading: A Catalyst
for Global Climate Conventions. Biotica Research Today 5(8),
614-616.
Copyright: © 2023 Abbas et al. This is an open access article
that permits unrestricted use, distribution and reproduction
in any medium after the author(s) and source are credited. Key wo r ds: Carbon trading, Climate change, Greenhouse gas emissions,
Introduction
Carbon trading, sometimes referred to as emissions trading,
is a market-based strategy used to minimize greenhouse gas
emissions and control pollution, with a special emphasis
on carbon dioxide (CO2) emissions. By giving businesses
and industries financial incentives to minimize their carbon
emissions, carbon trading aims to reduce overall emissions.
Based on the knowledge that discharging contaminants into
the environment has environmental consequences, this idea
has been put forth. Businesses are encouraged to reduce
their emission levels by giving these emissions a monetary
value, which results in cost mitigation.
In an economic endeavour known as “carbon trading,”
environmental services are traded, with a focus on
greenhouse gases (GHGs) removed from the atmosphere.
Ecological consulting companies purchase and trade these
gases, which are then sold to private or public purchasers to
balance their own polluting emissions. There are currently
a large number of emissions trading schemes (ETSs) in
operation throughout the world, each with unique features,
scopes, and frameworks (Figure 1). While some of these
Article History
Received on 08th August 2023 Received in revised form 16th August 2023
© 2023
e-ISSN: 2582-6654
August, 2023
Popular Article
Abstract
In the landscape of international accords addressing climate change, carbon
trading is crucial. In order to aid the reduction of greenhouse gas emissions,
this practise entails the exchange of emissions allowances or credits
between nations and other organizations. This article examines the mutually
beneficial relationship between carbon trading and international agreements,
emphasizing how mechanisms like emissions trading and Clean Development
Mechanism (CDM) projects, contained in conventions like the Kyoto Protocol
and the Paris Agreement, have encouraged international cooperation in the
fight against climate change. Carbon trading emerges as dynamic mechanism
driving emission reductions while promoting sustainable development on
a global scale through the convergence of market-based initiatives and
international agreements.
Sustainable development
programmes are related to commitments established in the
Kyoto Protocol, others take place in nations like the United
States that have not ratified the Kyoto Protocol.
The concept of carbon trading originated within the
context of the Kyoto Protocol (Figure 2). This global
agreement was designed to reduce carbon dioxide emissions
and concentration of greenhouse gases (GHGs) in the
atmosphere. This protocol was ratified in Kyoto, Japan
in 1997, a time when greenhouse gases posed imminent
threats to our planet’s climate, its ecosystems and life itself.
At present, the legacy of the Kyoto Protocol endures, as it
was structured into two distinct commitment periods.
• The initial commitment phase, spanning from 2008 to
2012, saw developed industrialized nations commit to
minimize their annual hydrocarbon emissions by 5.2% in
comparison to the 1990 levels as stipulated by the Kyoto
Protocol.
• Subsequently, the commencement of the second
commitment period in 2012 was marked by the introduction
of the Doha Amendment to the protocol.
Accepted in final form 17th August 2023
614 Journal Home: www.biospub.com/index.php/biorestoday
Abbas et al., 2023

Figure 3: Carbon trading markets (Lin and Huang, 2022)

Table 1: Top Ten countries in CO2 emission in the World

Figure 1: Carbon Market (Wara, 2007) (Source: Thio et al., 2022)
Rank Country CO2 Emitting Countries
(Mt)
1 China 11680.42
2 United States 4535.30
3 India 2411.73
4 Russia 1674.23
5 Japan 1061.77
6 Iran 690.24
7 Germany 636.88
Figure 2: Carbon Credits (Freedman et al., 2009)
8 South Korea 621.47
Top Carbon Trading Markets in World 9 Saudi Arabia 588.81
The important carbon trading markets in the world (Figure 10 Indonesia 568.27
3) are:
• European Union Emissions Trading System (EU ETS): The International Conventions Related to Carbon Trading
EU ETS stands out as a significant and well-established • United Nations Framework Convention on Climate Change
carbon trading market on the international scale. Its main (UNFCCC): Enacted in year 1992, the UNFCCC stands as a
goal is the reduction of greenhouse gas emissions, and it fundamental international agreement that establishes the
operates across several industries and nations inside the structure for worldwide endeavors aimed at combatting
European Union. climate change. Its main objective is to maintain the
concentration of greenhouse gases in the atmosphere at
• California’s Cap-and-Trade Programme: California has a level that prevents harmful human interference with the
put into place a cap-and-trade initiative that encompasses climate system.
a variety of sectors and industries. With the help of this
• Kyoto Protocol: Ratified in 1997 as an extension of the
programme, businesses are able to buy and sell carbon
UNFCCC, the Kyoto Protocol introduced obligatory targets
allowances in order to meet their obligations to cut
for emission reduction applicable to developed nations
emissions.
(termed Annex I countries). This commitment spanned the
• Regional Greenhouse Gas Initiative (RGGI): RGGI stands initial period from 2008 to 2012. Notably, it introduced
as a market-driven initiative situated in the northeastern the notion of emissions trading and initiatives like Clean
region of the United States. This program focuses on Development Mechanism (CDM) to aid nations in fulfilling
curbing emissions within the power sector and spans across their targets.
several states. It holds the distinction of being the inaugural • Paris Agreement: It was established in 2015, the Paris
compulsory market-oriented endeavor in the United States Agreement stands as a momentous international pact
aimed at mitigating greenhouse gas emissions. designed to enhance the worldwide reaction to climate
• Tokyo Metropolitan Emissions Trading Scheme: Situated change. Its primary objective is to restrict the escalation
in Tokyo, Japan, this represents a significant carbon trading of global warming to a point considerably lower than 2 °C
market within the Asian continent. Its scope extends across above temperatures observed before the industrial era, with
an extensive array of industries and sectors, showcasing a particular push to confine it to a 1.5 °C increase. Unlike
its comprehensive approach to emissions regulation and the Kyoto Protocol, the Paris Agreement encompasses
commitments from all nations, spanning both developed
reduction.
and developing states. Each country determines its own
Leading top 10 countries in CO2 emission in the world are nationally defined contributions (NDCs) as part of this
shown in table 1. agreement.

© 2023 615
Biotica Research Today 2023, 5(8): 614-616
• Doha Amendment: Enacted in 2012, the Doha Amendment
to the Kyoto Protocol introduced an additional phase of
commitment for Annex I nations. This extension required
these developed countries to make further reductions
in their greenhouse gas emissions during the timeframe
spanning from 2013 to 2020.
• Montreal Protocol: Although its primary emphasis isn’t
solely on climate change, the Montreal Protocol is a global
agreement crafted to safeguard the ozone layer. However,
it has made substantial contributions to the mitigation of
greenhouse gas emissions due to the fact that numerous
compounds accountable for ozone layer depletion are also
potent contributors to the greenhouse effect.
The Future of Carbon Trading
During 2009, the carbon market encountered a significant
challenge in the form of a global economic downturn. This
economic downturn cast uncertainty over emissions trading.
However, despite these circumstances, the carbon market
displayed remarkable resilience. In a year when the global
GDP contracted by 0.6% and industrialized economies
experienced an even more pronounced decline of 3.2%,
the carbon market continued to exhibit strong growth. By
the end of the year, the combined value of the market has
increased by 6%, reaching an impressive sum of US$ 144
billion (€ 103 billion). Throughout this time, 8.7 billion metric
tonnes of CO2 equivalent were exchanged.
Geographical Expansion
Certain emissions trading frameworks have naturally
expanded their geographic coverage over time. However,
the true potential for the geographical expansion of carbon
trading depends on the successful interlinking of different
trading systems. According to European Commission (EC),
the EU ETS is willing to form links with other compatible
mandatory cap-trade mechanisms (Figure 4) that uphold
environmental credibility. A crucial step in this direction, as
envisioned by the EU, involves creating an emissions market
that includes members of the Organization for Economic
Co-operation and Development (OECD) by the year 2015,
with subsequent plans to incorporate significant emerging
economies starting around 2020.
Broadening Sectoral and GHG Coverage
Current carbon trading initiatives have either undergone
Figure 4: Cap-and-trade (Goulder and Schein, 2013)
© 2023
expansion or are in the process of extending their scope,
encompassing a wider range of sectors and types of
greenhouse gases (GHGs). For instance, in its initial
trading phase (2005-2007), the EU ETS included carbon
dioxide emissions from high-emission establishments
within the domain of power and heat generation. This
also incorporated specific energy-intensive industrial
sector such as combustion plants, iron and steel, as well
as facilities engaged in manufacturing cement and glass.
Subsequently, in the Phase 2 (2008-2012), the scheme
continued to encompass these industries, with an additional
inclusion of nitrous oxide emissions stemming from nitric
acid production. However, Phase 3 (2013-2020) will witness
the expansion of the EU ETS scope to integrate fresh sectors
and gases, which will entail:
• CO2 emissions stemming from petrochemicals, ammonia
and the aluminum industries.
• N2O emissions originating from manufacturing of nitric and
glyoxylic acid, along with perfluorocarbon emissions tied to
aluminum industries.
Conclusion
Carbon trading stands as a dynamic and innovative approach
for tackling the issues presented by climate change and
release of greenhouse gases. By incentivizing industries
and businesses to reduce their carbon footprint through
market mechanisms, it offers a promising avenue for
mitigating environmental damage. While its expansion and
interconnection across various frameworks and regions hold
the potential for a global carbon market, the realization of
this vision hinges on overcoming intricate practical obstacles
and ensuring alignment between diverse trading systems.
As the world continues to grapple with the urgent need for
climate action, carbon trading remains a vital instrument
in the ongoing efforts to achieve sustainability and combat
the effects of global warming.
References
Freedman, B., Stinson, G., Lacoul, P., 2009. Carbon credits
and the conservation of natural areas. Environmental
Reviews 17, 1-19. DOI: https://doi.org/10.1139/A08-
007.
Goulder, L.H., Schein, A.R., 2013. Carbon taxes versus cap
and trade: a critical review. Climate Change Economics
4(3), 1350010. DOI: https://doi.org/10.1142/
S2010007813500103.
Lin, B., Huang, C., 2022. Analysis of emission reduction
effects of carbon trading: Market mechanism or
government intervention? Sustainable Production
and Consumption 33, 28-37. DOI: https://doi.
org/10.1016/j.spc.2022.06.016.
Thio, E., Tan, M., Li, L., Salman, M., Long, X., Sun, H., Zhu, B.,
2022. The estimation of influencing factors for carbon
emissions based on EKC hypothesis and STIRPAT
model: Evidence from top 10 countries. Environment,
Development and Sustainability 24, 11226-11259. DOI:
https://doi.org/10.1007/s10668-021-01905-z.
Wara, M., 2007. Is the global carbon market working?
Nature 445(7128), 595-596. DOI: https://doi.
org/10.1038/445595a.
616