Carbon emissions trading is based on the principle of cap and trade, widely acknowledged to have its roots in…
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The total number of carbon allowances circulating in each emissions trading system is capped. The key to cap and trade’s e ciency is that free trade is
permitted such that those with the lowest cost of abatement subsidise those with the highest cost, for pro t. Like in well-established equities markets,
liquidity is best served by allowing anybody and everybody to participate in the trading of emissions allowances, from installations covered under the scheme to private investors. Cap and trade is expected to feature prominently in international negotiations to cap global carbon emissions because of it’s track record of delivering greenhouse gas reductions at low prices and more
or less e ciently sending price signals for further reductions (where the e ciency is dictated by the rule setting policy makers, for example longer-term
regulatory certainty allows a longer term price signal).
It is also much more precise, and signi cantly more exible, than the much touted alternative market mechanism, carbon tax. Redshaw Advisors o er carbon trading and route to market services. To discuss your requirements please contact us.