The Climate Market

• Introduction to climate change
• The aim and functioning of the CDM market
• The aim and functioning of the EU ETS market
• The link between EU ETS and CDM
• Carbon Credit Pricing
• Emissions Trading (July 2007)
• State and Trends of the Carbon Market 2006 and 2007

Including introduction to, and the importance of, the technology transfer aspect of the UNFCCC and the current status of activities under the framework

Increased concern for global climate change due to increased emissions of the so-called greenhouse gases from human activities has resulted in the United Nations Framework Convention on Climate Change (UNFCCC) being adopted under the Rio Summit in 1992. Following this, the Kyoto Protocol, which defines the overall framework for international cooperation to reduce the level of greenhouse gases, was ratified in February 2005 thus creating binding commitments for reductions of greenhouse gas emissions on a global scale.

Under the UNFCCC, the developed countries are committed to take all practicable steps to promote, facilitate and finance the transfer of environmentally sound technologies and know-how to developing countries in order to enable them to reduce greenhouse gas emissions.

To learn more about the climate change issue please see the database.

The Clean Development Mechanism (CDM) is defined under the Kyoto Protocol as one of the Flexible Mechanisms. The CDM allows developed countries to reduce their emissions in a cost efficient manner by investing in greenhouse gas mitigation projects in developing countries, whilst at the same time providing opportunities for developing countries to move towards a more sustainable future through investment and the transfer of technologies.

Learn more about the functioning of the CDM

Taking point of departure in the European Union’s commitment under the Kyoto Protocol to reducing greenhouse gas emissions, the EU has developed a comprehensive scheme for trading of emissions of carbon dioxide among large emitting companies.

The EU Emissions Trading Scheme (EU ETS) started in the 25 EU Member States on 1 January 2005. The EU ETS is a cap-and-trade system based on the idea that creating a price for carbon through a market-based system provides the most cost-effective way for EU Member States to meet their Kyoto obligations and move towards the low-carbon economy of the future.

Learn more about the EU ETS market

In order to connect activities undertaken at the EU ETS market with the international climate activities the Linking Directive, Directive 2004/101/EC, established under the EU ETS system allows entities to use the flexible mechanisms to comply with the EU emission reduction commitment.

This section should contain a short introduction to the newest market trends on the carbon markets, and should be updated regularly.

To gain more knowledge of the carbon credit pricing and the current price situation at the different carbon markets please see the database.