Firms are set quotas on how much carbon dioxide they can produce per year, if they produce more than this allowance, then they buy an allowance from another firm that has not reached it’s quota on how much it can produce in one year! Get it?

Emissions Trading is particularly suited to the emissions of greenhouse gases, the gases responsible for global warming, which have the same effect wherever they are emitted.

Emissions of carbon dioxide – a greenhouse gas – are widely thought to be a key factor in global warming, increasing atmospheric temperatures around the world.

The idea of the carbon-trading scheme was to raise the cost to firms of continuing to pollute while creating a market to give an incentive to become more environmentally efficient.

They are traded in a similar way to buying and selling shares, there are a number of companies that offer the buying and selling of carbon units and many offer different commissions and even free trading if you shop around. I even saw one firm that offered a one stop shopping for Renewable Energy, Biodiversity, and Greenhouse Gas. Its like an online retailer but for things you can’t touch. Ill have 2 pounds of apples, a bag of potatoes and a Biodiversity credit please!!!

On an international level countries are able to deal in carbon trading The potential benefits of such a system for developing countries would be that poorer, developing countries can sell there surplus carbon dioxide to richer countries. This income could stimulate much needed economic growth. They could also achieve their Kyoto commitments at the lowest possible cost as the money needed to invest in cleaner technology can be funded by the trading on carbon units. Countries like the USA and UK could pay the countries in Africa to REFOREST there lands, this reduction in carbon dioxide in the planet would then allow USA/UK firms to emit extra carbon dioxide into the atmosphere. It would probably be cheaper to REFOREST parts of Africa then to buy state of the art cleaner technology for firms in the West. How many trees could you plant for a million dollars/pounds in Africa? The cost of cleaner technology in the West obviously varies from industry to industry, size of the company, technological advances available etc but surely a company would not trade CO2 unless we were talking big money. Carbon trading sounds a bit strange to me, as you are trading air, but if this leads to more trees being planted and a reduction in climate change – Im all for it!

Carbon offsetting – what is it?

Carbon offsetting is the process in which a person reduces Carbon emissions by paying a reputable environmental organization to plant trees in your place, thus reducing YOUR carbon footprint on the world. Businesses and people alike are encouraged to repent their destructive emissions to achieve a carbon neutral status. Offsetting your carbon also allows an individual to tell friends and family that they actually take action against global warming.

Reforestation is most commonly associated with Carbon offsetting, but the promotion of alternative energy also reduces overall CO2 emissions. Everyone contributes Carbon into the atmosphere. Everyday tasks such as boiling a kettle, reading your e-mail, and driving to work all generate Carbon, a major component of global warming. In order to combat a growth in Carbon emissions people are encouraged to offset what they can’t reduce themselves. If this is done, and done properly, environmentalists believe that the dangers global warming can be averted.

Although the efficiency of Carbon offsetting has been debated, it is clear that reputable organizations working in an honest fashion can make a difference. It is impossible to immediately transition from a fossil fuel dependent society to a cleaner ethanol based society over night, thus it is important to promote the use of cleaner energy.

Environmental organizations such as CO2Debt.com work closely with other ecologically conscience groups to steer away from the use of unclean fossil fuels.

The Department of Energy actually has a calculator to tell you how much greenhouse gases you produce on a daily basis.

WHAT IS A CARBON FOOTPRINT? The amount of greenhouse gas you generate by an activity or process. In other words, what impact you make on the environment measured in metric tons of carbon dioxide (C02). This calculator, compliments of the Department of Energy, can be found at http://www.epa.gov/climatechange/emissions/ind_calculator.html and lets you calculate your own carbon footprint. How much greenhouse gas do you produce while going through your daily activities such as driving, electricity use, and heating your home?

WHAT EXACTLY ARE GREENHOUSE GASES? Bottom line: Without Greenhouse Gases to maintain Earth’s temperature, it would be too cold for habitation. We need Greenhouse Gases but…we’re tromping heavily with our carbon footprint boots and that’s making the temperature too warm. Hence, the Greenhouse Effect mutates into Global Warming and that’s taken us from “We really should consider renewable energy” to “We MUST implement renewable energy NOW”.

CARBON DIOXIDE IS A GAS SO IT’S HARD TO WRAP MY HEAD AROUND METRIC “TONS” OF CO2…HOW MUCH IS THAT REALLY? The tonnage doesn’t really matter as much as what you can do to reduce that weight. The average homeowner who drives to work, comes home each evening to a household of four, and flies once a year on vacation has an average carbon footprint of 17 tons of C02. That’s not counting what you breathe out…that’s the just excess CO2 you’re using that, multiplied by millions, contributes to Global Warming.

On the flip side, by taking simple steps like changing your light bulbs, driving 10% less, buying Energy Star appliances, you can cut your personal damage from 17 to 7 tons…and that’s not even counting installing solar panels on your house or business!

By taking that additional solar step, you not only zero out your own personal carbon footprint but you create a SOLAR FOOTPRINT, which lessens the damaging effects of others. Then you are not only serving as a role model for others, but you’re negating their damage until they take responsibility for their own footprint.

TRANSFORM YOUR CARBON FOOTPRINT INTO A SOLAR FOOTPRINT. If you own your own home, take advantage of the tax and other incentives available and install a Solar System on your own roof. Even if you rent, you can still be a powerful Solar Champion by urging your local businesses and schools to seriously consider taking their Renewable Energy efforts to the next level.

It can be done. It’s already begun. One footprint at a time.

In an effort to reduce energy usage across the country, the federal government has begun offering tax incentives for homeowners who purchase and put into use methods and means of creating and utilizing renewable energy.  The administration of President Barack Obama has expanded upon existing incentives and added new incentives in an effort to encourage home builders and existing homeowners to convert to renewable sources of energy rather than maintaining a dependence on fossil fuels.

Technologies that are eligible for the incentive include solar water heaters, photovoltaics, fuel cells, wind generators, geothermal heat pumps, and other technologies that employ the use of solar electricity.  Geothermal heat pumps are required to meet energy star certification requirements, while solar water heaters must be certified by the SRCC in the state in which they are installed.  Half of the energy or more used to heat the water within the home must be derived from solar sources.  It is also requires that fuel cells have an efficiency of electricity-only generation of thirty percent or more.

The standard allowance for renewable energy sources is thirty percent of the cost, though there is a cap on many of the incentives if they were installed before January 1, 2009.  Systems installed after this date have no maximum incentive.  The deduction caps on these systems vary and are as follows.  For solar-electric systems, solar water heaters, and geothermal heat pumps installed in 2008, the cap is set at two thousand dollars.  For wind turbines installed in 2008, the cap is set at four thousand dollars.  Fuel cells have an incentive cap of five hundred dollars per 0.5 kW.  It is also very important for homeowners and home builders to know that any excess credit gained from these incentives may be carried over into the succeeding tax year.

In order to claim these tax incentives, homeowners must file IRS Form 5695 with their Federal Income Tax Return or as part of an amended return.  This tax credit was initially established in 2005 as part of the Energy Policy Act, and was extended as part of the Energy Improvement and Extension Act of 2008.  In February 2009, the credits were enhanced and the bill extended until 2016 as part of the American Recovery and Reinvestment Act.

In all, there are a number of federal incentives to encourage the transition to renewable energy sources as well as to help offset the costs associated with doing so.  Homeowners should also look into the various grants available to consumers looking to build a home that utilizes renewable energy as a primary energy source.  Most states offer additional incentives from the use of these energy products, and homeowners are urged to look into both state and federal incentive programs any time they are considering the utilization of renewable energy sources.

The energy business has one of the longest timelines of any industry. Decisions are being made today for oil or natural gas fields that will only begin to flow fifteen years from now. A power plant approved tomorrow may be operating for half a century. And, increasingly, many of the big decisions will be measured not in the hundreds of millions, but billions, of dollars. Investors, in the meantime, have to decide where to put their bets on technologies that will take years to come to fruition.

Inevitably, much will change over those time frames. Unexpected geopolitical clashes will roil markets. Economic performance will surprise. Technology will bring in new energy sources and change the competitive playing field. Governments will undoubtedly change their minds on the balance between markets, on the one hand, and regulation and state ownership, on the other-and more than once.

Today, the outlook for regulation of carbon emissions creates another layer of uncertainty. There could be strong pressure to change the fuel choices in the face of tighter carbon regulations. Or the international community may fail to agree on effective carbon controls, and regulations could be limited or not effectively enforced. There will certainly be much debate as to whether to rely on markets or on regulation to meet climate change goals.

How to make decisions in the face of such uncertainty? “Scenarios” can play a very useful role. A disciplined process of scenario development provides a framework for the uncertainties. These are not forecasts or extrapolations. Rather, they are logical “stories” about alternative futures that force one to think about the “what-ifs,” the surprises and the range of uncertainties. Think of them as thought experiments, but grounded in wide-ranging research and analysis. Our energy scenarios combine structured narratives of how the larger world could evolve in the future with detailed energy market modeling. Yes, they are thought experiments, but the objective is to help people to think systematically about trends and the potential for changes, ruptures and discontinuities. Scenarios, of course, can be used for any industry or for public policy.

Cambridge Energy Research Associates (CERA) recently completed study, Dawn of a New Age: The Energy Future to 2030, presents three long-term energy scenarios. The objective is to clarify the risks and choices ahead. Each of the scenarios examines an important strategic question about how the world may unfold over the next 25 years and what this means for energy markets (see CERA’s Dawn of a New Age Scenarios in Brief).

What happens if China, India and other countries in Asia continue to grow at their current breakneck speed? Our Asian Phoenix scenario examines the implications for energy markets of such a world. In this scenario, Asia reaches 54 percent of world GDP in 2030 and grows from its current 29 percent of world energy consumption to 42 percent. Continued strong economic growth in Asia pushes oil consumption to new highs. Tight markets keep prices are well above the last 25 year average of $25 per barrel.

One result is that the rivalry for access to oil and gas resources not only grows but involves new players. “Eastern oil companies” emerge to compete with the traditional Western companies, especially in new regions of supply such as Central Asia and Africa. Another result, perhaps surprising to some, is that coal consumption will grow substantially, particularly in China and India. Coal powers these nations to new global standing but it also will become, if without mitigation, an increasing source of geopolitical tension as climate concerns mount.

What happens if oil prices move well above the $78 per barrel experienced last year? Could oil lose its current almost totally dominant position in the transportation sector? These are the questions that the Break Point scenario explores, a world in which oil breaks through the $100 per barrel barrier for a sustained period. In this scenario, it is not shortage of resources below ground that pushes prices up, but rather geopolitical events. The scenario demonstrates how ultra-high oil prices and energy insecurity could unleash a mix of policy and price responses and technological innovation that would push the world to break from usual energy patterns.

In this scenario, one result of government and industry action, and new entrants in the energy business, is that by 2020, oil no longer has a monopoly grip on the transportation sector. Other liquid fuels derived from biofuels, oil/tar sands, coal-to-liquids and gas-to-liquids jostle for market share. Plug-in hybrids begin to win a share of the market.

Another outcome of high prices explored in Break Point is progress toward reducing carbon emissions. National security concerns associated with high oil prices work hand-in-hand with concern over climate change (see “Aspen Declaration of Energy Independence”). The result is that the U.S., Europe, Japan and even China and India embrace policies that expand investment in renewables, nuclear and emerging carbon capture and storage technologies. The high oil price also creates strong incentives to improve energy efficiency. In Break Point, global energy intensity (the amount of energy required to produce a unit of GDP) in 2030 is 32 percent lower than in 2005.

What would happen if public support for globalization around the world wanes and economic insecurity feeds greater nationalism and protectionism? That question is at the heart of Global Fissures, which suggests that energy markets could evolve in an entirely different direction. Diminished economic growth would cause oil prices to tumble back into the $20 range. In this scenario, governments assert more control over the energy sector. The trend in the electric power industry in many countries is a move away from competition and toward social mandates and more regulatory intervention-in some cases, even the nationalization of assets.

Given the high stakes and uncertainty surrounding the future of energy, there is a need for structured ways of thinking about how the future may unfold. The next 25 years will be full of surprises. Scenarios can help us better prepare for these surprises-and perhaps even anticipate the surprises before they arrive.