Brockmann and Company | Customer Insights

The Kyoto Protocol entered into force in 2005 and has been ratified by 175 countries, but not the USA. Developed country signatories have to submit an annual greenhouse gas inventory and work to reducing their carbon dioxide production.

 A major provision of the international treaty was the ability of countries that did not meet their carbon reduction goal to purchase offsetting emission allowances that are sold by other countries that exceeded their obligations.

Taking it one step farther, the European Commission encouraged the formation of trading exchanges in 'carbon permits'. A recent Wall Street Journal article discusses how Richard Sandor's company, Climate Exchange PLC is trading these carbon permits.

In fact, Congress is now debating how to setup these systems for regulating greenhouse-gas emissions that will help major carbon dioxide producers use good ol' fashioned self-interest to reduce their emissions or find permits from peers that have reduced their outputs. It will also help investment banks speculate on the commodity just as they might with copper, silver or pork bellies.

---