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Business Daily: The Risks and Rewards of Carbon Trading

15/12/2009

The Risks and Rewards of Carbon Trading

BBC World Service - Business Daily, The Risks and Rewards of Carbon Trading

Trading in carbon is likely to grow but can it actually reduce global warming?

The financial market in trading carbon could be worth trillions in another decade. But can the market set a price for carbon which will persuade companies to adopt greener energy?

Whatever emerges from the Copenhagen climate change conference, one thing is certain. Carbon trading is set to grow.  It is a financial market that some expect to be worth three trillion dollars a year by 2020. It uses a system known as cap and trade. 

Governments set the limits or caps on how much carbon dioxide companies can emit.  If they go above these limits they must buy permits to do so.  If they go under the limit they can sell permits they do not need.  The existing market is in Europe but the USA, China, Japan and Australia are considering similar schemes.   

But can it be effective? The purpose of trading carbon is to set a price for using fossil fuels that encourages firms to adopt green technologies that might otherwise be too expensive.   But so far the price of carbon allowances has remained volatile and low, which hardly sends the right price signal.  The BBC's Mark Gregory investigates.

And from Shanghai, the BBC's Chris Hogg reports on China's market for green technology.

Also we talk to young British entrepreneur Rajeeb Dey about his 'boot-strapped' internet start-up.

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