Emissions trading (ET)

One of three Kyoto mechanisms, by which an Annex I Party may transfer Kyoto Protocol emission units (carbon credits or permits) to, or acquire units from, another Annex I Party. Emissions trading allows countries that have emission units to spare - emissions that have been permitted to them but that are not being "used" (AAUs) - to sell this excess capacity to countries that have exceeded their targets. In addition to actual emisson units, removal units (RMU) from land use, land-use change and forestry (LULUCF), emission reduction units (ERU) from joint implementaton (JI) projects, and certified emission reduction (CER) from Clean Development Mechanism (CDM) project activities can be traded and sold under the emissions trading mechanism. An Annex I Party must meet specific eligibility criteria to participate in the emissions trading scheme.


Sources:

Unfccc.int

Read more:

Wikipedia.org/Emissions trading

www.cepal.org (emissions trading and participation of developing countries)

Web.mit.edu (the effects on developing countries of emissions trading)