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What is carbon trading?

Carbon trading is the process of buying and selling permits and credits to emit carbon dioxide. It has been a central pillar of the EU’s efforts to slow climate change. The world’s biggest carbon trading system is the European Union Emissions Trading System (EU ETS). It is beset with problems and corruption and yet countries such as Brazil and China continue to pursue carbon trading as a way to tackle rising emissions.

Carbon trading is increasingly criticised, not least because carbon dioxide emissions in industrialised countries are not declining at the necessary rate to avert catastrophic climate change.

For more information about carbon trading, see Fern’s beginners guide Trading Carbon. How it works and why it's controversial, or the 20 page version 20 page version Designed to fail.

Fern and many scientists, economists and NGOs believe that carbon trading is a dangerous distraction from the need to end fossil fuel use and move to a low carbon future. We do not have time to wait for a high price on carbon: we must shift to a low carbon energy, agriculture, transport and industrial world now. The best way to do this is through direct regulation.

Fern’s initial interest in carbon trading came about because trees were seen as a way of offsetting carbon cheaply, while simultaneously providing money to protect trees. What are offsets explains why you can never offset carbon by protecting or planting trees. There is also no evidence that carbon trading has lived up to the promise of providing money.

Despite the flaws inherent in pollution trading, the concept continues to appear in proposals to reduce environmental harm. For more information visit our campaign on biodiversity offsetting.


Most recent publications

Forestwatch Issue 104

  • Forest Action Plan in the pipeline
  • World Bank Pro-sinks meeting shuns NGOs
  • CPET condemnstimber schemes
  • Bialowieza NGOs call on IUCN to i ntervene
  • DG Environment restructuring
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Kyoto: What's to celebrate?

A coalition of NGOs, social and environmental activists, communities, scientists and economists from around the world concerned about the climate crisis, the Durban Group, charged that the 1997 climate treaty not only fails to cut greenhouse gas emissions enough to avert climate catastrophe, but also steals from the poor to give to the rich.
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The Plantar Plantation

Presentation given at the 2004 FME meeting on the problems with the Plantar Plantation.

Forest fraud: say no to fake carbon credits

FERN and SinksWatch are calling for EU governments to exclude carbon sinks projects from their climate project portfolios at COP9 in Milan. The report assesses the potential impacts on forests and forest peoples of granting carbon credits to forest-related projects under the Kyoto Proto

col's Clean Development Mechanism.