The Copenhagen summit failed to deliver the binding multilateral commitment many had hoped for. But the minutiae of carbon markets continue to be debated on a smaller scale, where – as with so much regarding climate change – the key country will be China.
The most important vehicle in carbon trading is the clean development mechanism (CDM). This is the deal struck under the Kyoto Protocol that allows industrialized countries with commitments to reduce their greenhouse gas emissions to invest in projects that reduce emissions in the developing world. This is the foundation of carbon trading: approved CDM projects generate credits, which can then be traded. The whole arrangement is overseen by a branch of the United Nations Framework Convention on Climate Change (UNFCCC). According to that group’s data, the vast majority of eligible projects so far have come from Asia: 1,398 out of 1,890 registered projects, the bulk of...
