What do you mean by carbon trading?

The carbon trading system refers to a market trading system that uses greenhouse gas emission allowances or greenhouse gas emission reduction credits as the target for controlling greenhouse gas emissions. As a policy market, the carbon trading system is built to rationally allocate emission reduction resources within a specific range and reduce the cost of greenhouse gas emission reduction. The carbon trading system currently piloted in China adopts a cap-and-trade mechanism, through legislation or other binding forms, to set a cap on the total amount of greenhouse gas emissions (cap) for those within a certain range , Decompose the total amount of emissions into emission quotas, and allocate them to the emitters according to certain principles and methods (free distribution or auction). Quotas can be traded between various market players including emitters. Quotas represent carbon emission rights, and the emitters ’emissions cannot exceed the quotas they hold. At the end of each performance cycle, the manager shall conduct an assessment of the performance of the emitter. If the amount of the quota paid by the emitter is less than the amount of emission, it will be deemed as not fulfilling the performance responsibility and must be punished.

In 1997, the "Kyoto Protocol" adopted by the Third Conference of the Parties to the UN Framework Convention on Climate Change proposed three flexible market compliance mechanisms, including emissions trading. In the protocol, for the first time, the legal restrictions on greenhouse gas emissions were made into a resource, and a series of greenhouse gas emission seed production resources were tradeable, and a carbon trading system was born. So far, many countries and regions around the world have tried to operate the carbon trading system and achieved certain results. The EU, New Zealand, the United States, Australia and South Korea have formed their own unique carbon trading systems.