Schemes to reduce carbon emissions

Companies and governments are turning to emissions trading as a weapon to fight climate change in a carbon market worth $125 billion last year. Here are some of the proposed plans and existing schemes.

Published: 1:32PM BST 13 Aug 2009
Carbon markets allow polluters to buy rights to emit greenhouse gases such as carbon dioxide. Under cap and trade schemes, companies or countries face a carbon limit. If they exceed their limit they can buy allowances from others. Alternatively, they can buy carbon offsets from projects which avoid greenhouse gas emissions outside the scheme, often in developing countries.
Established schemes

Kyoto Protocol
Launched 2005
Mandatory for 37 developed nations. The US never ratified the pact
Covers all six main greenhouse gases
Target: 5 per cent reduction in 1990 emissions by 2008-2012
How it works: Rich countries cut greenhouse gases at home or buy emissions rights from each other - if one country stays within its target it can sell the difference to another emitting too much. Alternatively, they can buy carbon offsets from projects in developing countries under Kyoto's clean development mechanism.
The present round of Kyoto expires in 2012 and the world has committed to sign a new pact in December.
European Union Emissions Trading Scheme
Launched 2005
Mandatory for all 27 EU member states
Covers nearly half of all EU carbon emissions
Target: 21 per cent cut below 2005 levels by 2020
How it works: Member states allocate a quota of carbon emissions allowances to 11,000 industrial installations. Many electricity generators will have to pay for allowances from 2013.
Companies can buy carbon offsets from developing countries if that works out cheaper than cutting their own emissions.
North-eastern US states' Regional Greenhouse Gas Initiative (RGGI) cap and trade scheme
Launched January 2009
Covers carbon from power plants in 10 north-east states
Target: 10 per cent cut below 2009 levels by 2018
Japanese voluntary carbon market
Launched October 2008
Covers carbon emissions from energy production 2008-2012
How it works: Companies exceeding their voluntary targets can buy carbon allowances from others that stay under theirs, or from small companies to help them fund efficiency gains, or buy carbon offsets.
Proposed schemes
Australian Carbon Pollution Reduction Scheme
Launch mid-2011
Covers 75 per cent of all Australia's greenhouse gas emissions
Target: Australia's national target is to cut greenhouse gases by 5-25 per cent below 2000 levels by 2020, depending on what other countries commit to.
How it will work: Australia will auction most of its permits. The scheme plans to curb the impact on competitiveness by making permits free for companies that depend on exports, and by having a carbon price cap of A$10 per tonne initially.
US federal climate change bill
The US Senate is mulling approval of a climate bill which the Democrat-controlled US House of Representatives narrowly approved in June. It faces a tougher test in the Senate.
Launch 2012
Covers carbon dioxide and other greenhouse gases
Target: Cut 17 per cent below 2005 levels by 2020
How it would work: Industry would get most allowances for free initially. Companies could offset up to 2 billion tons of their emissions annually by paying for "green" projects. The bill would pre-empt any similar scheme from US states from 2012-17.
US and Canadian Western Climate Initiative
Launch 2012
Covers six greenhouse gases across 11 US and Canadian states, from power plants and transport
Target: 15 per cent cut below 2005 levels by 2020
New Zealand scheme
Launch delayed
Target: To be announced
Plan is to include forestry initially, and subsequently other sectors including electricity, transport and agricultural waste
Source: Reuters