Carbon Trading
Any trading system designed to offset carbon emissions from one activity (such as burning fossil fuels in manufacturing, driving, or flying) with another (such as installing more efficient technologies, planting carbon-reducing plants, or establishing contracts with others not to partake in carbon-releasing activities). The Chicago Climate Exchange (CCX) is the first and biggest carbon trading market in existence and is modeled on a stock market. Other programs, such as driveneutral.org also allow carbon trading for individuals without interfacing directly with the CCX or other trading systems.
When activities that reduce or capture carbon are paired successfully with those that produce it, these are said to be carbon neutral or climate neutral.
Is there an active carbon trading market in Europe? Is it bigger than the CCX?
There is a carbon trading market in the EU, now bigger than the CCX even. It’s the ECX (European Climate Exchange): http://www.europeanclimateexchange.com/
Actually, there are many carbon trading markets in Europe. It turns out that Germany is the largest in Europe and the world. The CCX is the second largest. Should Canada implement its planned exchange, it would become the second largest with the CCX dropping to third place.
The European Climate Exchange (ECX), despite the fact that Kyoto has been ratified in most of Europe, is a subsidiary of the Chicago Climate Exchange (CCX) and, as Chuck states above, has less trading volume than the CCX, which ironically is completely voluntary.
This is a bit misleading however because EU countries trade freely within the group and even outside of it. So while the CCX may be in the top 5 markets in terms of transaction volume, the collective of countries trading within the EU far exceeds anything happening within other regions including the US.
The idea of carbon trading has strong potential, especially in our capitalist society. However, we should proceed cautiously. The lure of profits has the capability of producing more negative effects than positive. For example, with the buzz of cap and trade whirling, I recently saw a company on TV that was boasting its carbon offset capability through oceanic fertilization which produced extensive algal blooms. These blooms consume carbon, which they touted could be sold on the carbon market. (It should be noted that currently there are not any regulated and approved oceanic fertilization projects for carbon credits)
Aside from the scientific challenges of this theory, the idea of altering the already sensitive oceanic ecosystem for profit is terrifying to me. The impacts of such endeavors are difficult to foresee and require extensive research and planning prior to implementation if they are to be truly beneficial. The complex marine food web is not something to be experimented with for capital gains.