Global warming is the persistent increase in the temperature of the surface of the earth. It is caused by the release of what are called greenhouse gases as a result of human activity. These gases stay in the atmosphere and trap the solar radiation causing global warming. The most important greenhouse gas is carbon dioxide which is released when fossil fuels are burnt.The effects of global warming are disastrous and the governments of all countries are jointly and severally seized of this critical issue. Various solutions are being pursued to stop global warming. However the only path that has begun to show results is a scheme known as carbon emissions trading. This scheme is well under way in the United States of America and the European Union and other governments are pushing hard to implement it as well. Each manufacturer is set a quota on how much carbon dioxide it can release into the atmosphere. The quota depends on a number of factors such as products manufactured, manufacturing capacity and technology used. Then the emissions of each manufacturer are measured. Manufacturers who are more efficient release less carbon dioxide than their quota and therefore are able to sell the balance. Manufacturers who are less efficient release more carbon dioxide than their quota and are compelled to buy the unused quota of the efficient manufacturers. These quotas are sold competitively on exchanges not unlike the stock exchanges. There are brokers who shop around and buy the quotas cheap and make a packet on selling the quotas to companies who are desperate to buy.
The manufacturers who have to buy quotas are incurring extra costs. Say a manufacturer has to pay $50,000 for the quotas he buys. He will say I can be within my quota if I invest $100,000 in improved technology. His investment is paid back in two years. The manufacturer who is within his quotas will also be willing to invest further if the revenue he gets by selling the quotas justifies the investment. Hence there is an incentive for reducing carbon dioxide emissions, which will ultimately stop global warming or at least reduce it.
What works for manufacturers, works for countries as well. Under the Kyoto Protocol, an international agreement to stop global warming, the developed countries have accepted a stiff reduction in carbon dioxide emissions, whereas the developing countries have no obligation to reduce emissions. If the developing countries are able to reduce emissions then they can sell these to the developed countries. Now comes the interesting bit. A country can of course reduce emissions by getting the manufacturers to improve technology. But they have another option as well. Plants absorb carbon dioxide from the air. Hence large scale forestations also enable reductions in carbon dioxide emissions and this is an acceptable method. Developed countries do not have surplus land for large scale forestation, but many developing countries do. Therefore a country like the United States could pay for forestation in a country in Africa and take credit for the carbon dioxide reduction there. This would be a less costly option and reduction in global warming would be achieved.
