Custom essays on Climate change

The signing and subsequent ratification of the Kyoto Protocol initiated the rapid development of a new kind of market – trading greenhouse gas emissions (aka – the carbon market, the market of emission quotas, the market of emission certificates, market greenhouse services). It wore a buyer acquires the right to an additional emission to the guaranteed right of greenhouse gases. Specificity of the participants of the market and proposed to him the goods is such that experts agree that it is since its inception has carried a line is not national, and global international education.
However, already have and are developing local systems of trading in Australia. Vendors at these shopping sites primarily by countries with excess capacity for greenhouse gases in the person authorized by the State of commercial structures of either the industry, these surpluses have accumulated. Purchasers in most cases are large industrial enterprises, which seek way to reduce the risks of loss of their profits as a result of violations of environmental laws.
Until recently, the carbon market dominated by intermediaries, such as carbon funds, the emission brokers and consultants. 2005 has witnessed the emergence in the market greenhouse services stock exchanges and auctions. The emergence of these two mechanisms reflected the desire of market to facilitate financial transactions, reducing trading risks and increase transparency in pricing. Such marketplace – New South Wales market – is already successfully operating in Australia. (Reinaud, J. & Philibert C. 2007)
The evolution of prices in this market will largely depend on further expansion or reduction in the number of countries that have signed the Kyoto Protocol, as those who sell their quota, and those who buys them. Experts believe that, for example, adherence to Kyoto, the U.S. will lead to a sharp increase in market value of the conditional tons of greenhouse gas. According to the forecasts of economists, it can vary between 10-50 dollars per tone with a total demand of 10-15 billion tons.

Strengths and limitations of emissions trading schemes
International emissions trading is carried by the state. This means from trade may come directly into the state treasury or in the special fund. Rigid mechanism of transmission of redundant units installed number (AAU), one country to another country in exchange for funding or other economic benefits.
Right to sell AAUs belong to the state, which is a Party to Convention on Climate Change. Ability to trade emissions at the enterprise level is possible in the case of distribution quotas on greenhouse gas emissions within the country.
Emissions trading will streamline the process of implementing nature conservation activities and create a real material incentive for investment in environmental defense.
The proceeds from the sale of quotas are intended to finance emission reduction projects in the country of the seller and buyer, purchasing quotas provides funds for such projects and has the ability to control in one form or another of their intended use.
The main economic threat to the market of emission quotas will be, paradoxically, the successful implementation of the member countries points in the protocol that this market has created. If global emissions of harmful gases in the atmosphere will remain stagnant or fall, it will inevitably lead to stabilizing the market and reduce prices. Other factors affecting the number and volume of sales contracts is the quantity of surplus emission allowances, the need for individual enterprises in such quotas and regulatory activity by states and supranational entities. (Gilbertson, T. & Reyes O., 2009)
Experts believe that since the mechanism of sale of quotas was created at the interstate level, its effectiveness and the degree of proliferation is directly dependent on the regulatory activities of national and supranational governmental international organizations.
As expected, the carbon market affect commodity markets in which operators are active. Successful market instrument characteristic is that the signal about the price of carbon goes through the economic chain, gradually stimulating the transition to low-carbon production and consumption at each stage. The degree of integration of the price of carbon in the commodity markets still varies considerably. In some industries the importance of external competition from competitors that do not apply such a policy in the sphere of climate change, limited the influence of signals on the prices of quotas. For other industries, especially electricity, more important is the very analysis of the potential influence, provoked an increase in electricity prices, although the main reasons for this sharp rise in prices had been rising energy prices on the world market and structural aspects of the Australian energy market. (Reinaud, J. & Philibert C., 2007)