Emissions Trading (ET)
A market-based approach to achieving environmental objectives that allows those reducing GHG emissions below what is required to use or trade the excess reductions to offset emissions at another source inside or outside the country. In general, trading can occur at the domestic, international and intra-company levels. Article 17 of the Kyoto Protocol, allows Annex B countries to exchange emissions obligations. Negotiations will determine the extent to which firms and others may be allowed to participate. International emissions trading constitutes one of the Kyoto Mechanisms, designed to provide Annex B countries cost-effective flexibility in reducing emissions to achieve their agreed commitments.
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