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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

Fight against climate change threatened by faulty carbon calculations

As the EU debates climate and energy measures for 2030, FERN releases new evidence which shows that calculating emissions by lumping carbon emissions from fossil fuels together with those created by terrestrial sources hinders efforts to combat climate change.

Misleading numbers summary

This is the summary version of misleading numbers. It outlines that fossil and land-based carbon are not interchangeable and that emissions from fossil fuels cannot be negated by increasing or protecting the storage potential of forests and other land based carbon.

PDF iconmisleadingnumbers_summary.pdf439.22 KB

Misleading numbers: The Case for Separating Land and Fossil Based Carbon Emissions

The word ‘carbon’ appears with relentless ubiquity in the news and in government policy and legislation. It is discussed as if it were a simple, almost abstract and easily quantifiable substance. However, like many ubiquitous words or concepts, the term ‘carbon’ needs some unpicking. The report outlines that accounting for land use carbon emissions is imprecise, costly and resource intensive, and the word ‘accounting’ — which implies real numbers — is misleading. 

State Aid and climate change: when good ideas go bad...

This press release comes at a time when the European Commission is discussing its State Aid guidelines for environmental protection. It raises concerns that changes made to State Aid legislation last year that permit Member States to subsidise the EU’s worst polluters are not on the agenda. It links to FERN's new presentation about how State Aid is being used to fund climate change (link).

PDF iconState Aid PPT Release_Final.pdf73.31 KB

FERN's contribution to 2015 climate change agreement

FERN's contribution to the EU's upcoming discussion on the 2015 climate agreement. It highlights the importance of fighting the root causes of deforestation, of addressing forest governance, and of dealing with reducing fossil fuel consumption through direct regulatory policies rather than through carbon markets.