Carbon Trading

Question 1

What is carbon trading ?

Answer 1

A method that aims to reduce emissions by providing incentives for major polluting industries.

Question 2

Name 4 advantages of carbon trading

Answer 2

1. Control- provides the government with control over the level of carbon dioxide emmited from a country

Question 3

2. Financial incentives

Answer 3

Companies are provided with an incentive to reduce polluting processes and equipment to a minimum and therefore potentially generate an income through the selling of extra permits.

Question 4

3. Flexibility 4. Environment

Answer 4

3. Allows companies to enter a period of transition that suits their unique needs
4. The scheme would see a reduction of carbon dioxide emissions.

Question 5

What are the disadvantages of carbon trading??

Answer 5

1.complexity of the market- There are difficulties in governing the carbon scheme as a result of markets are open to fraud and manipulation. For examples investors are buying permits to make profit and not for the benifit of the environment

Question 6

2. Economy

Answer 6

Businesses may not be willing to get involved if this will affect their profitability. Smaller companies will buy additional permits instead of installing less polluting technology.
Some would argue that permit prices are too low to stimulate changes with companies towards lower carbon alternatives

Question 7

Size of permits

Answer 7

-countries negotiated the quantity of permits needed themselves

• it is possible these figures where over estimated to give them a larger amount of permits

-this means a nation will have excess permits that they can sell

Question 8

Difficulties surrounding the measuring of emissions

Answer 8

These are often carried out by companies internally

As a result their validity is questionable