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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.

Campaigns: 

Most recent publications

Trading carbon: how it works and why it is controversial

In the drive to tackle climate change, carbon trading has become the policy instrument of choice among governments. It is also a central element of the UNFCCC’s Kyoto Protocol. National or regional carbon trading schemes are now operational in Europe, the USA, New Zealand and elsewhere.

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PDF iconOPEN1.84 MB

Forestwatch Issue 145 and Copenhagen Special

  • EU Member States reject prohibition of the sale of illegal timber
  • NGOs reject Ecolabel for copying and graphic paper
  • Will Europe follow America’s ECAs in reducing GHGs
  • Integrated Product Policy and Beyond
  • Member States’ support binding biomass criteria
  • Copenhagen Update (Available in French and Spanish)

Why Congo Basin countries stand to lose out from a market based REDD

This briefing paper unravels the implications of setting a historical baseline with a correction factor for low deforestation countries. It also explains why carbon markets are unlikely to raise the anticipated funds for forest protection, due to the unsuitability of applying these policy mechanisms to forests, and why any funds raised are unlikely to reach Central Africa or other regions with low deforestation rates and weak governance.

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PDF iconcongo basin countries lose out.pdf266.55 KB

Forestwatch Issue 144 and update from Barcelona

  • Climate, energy and environment change
  • A binding forest agreement?
  • Biomass: binding sustainability criteria needed
  • FERN.org relaunched
  • First US illegal timber investigation
  • EU ratifies Ghana VPA
  • Palm oil funding frozen
  • Update from UNFCCC Barcelona meeting
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PDF iconFW 144 December 2009213.17 KB
PDF iconBarcelona update118.32 KB

Forestwatch Issue 143 November 2009

  • EU Council reaches a troubling conclusion
  • Flawed bioenergy policies will fail EU forests
  • CAR VPA negotiations calendar ambitious
  • CDM to open doors to large scale plantations
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PDF iconFW 143 Nov 2009.pdf212.16 KB

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