Emissions trading schemes have had a chequered past. They are designed with a decreasing cap on the number of allowances available for purchase, to guarantee a rising carbon price and send a clear signal to the market that CO2 emissions are not profitable. Thanks to the market, companies that reduce their emissions can sell the permits they no longer need at a profit, while those that continue to pollute must pay an ever-increasing price.
In the past, major polluters, including the big oil companies, have publicly spoken out in favor of carbon markets – which are notoriously difficult to set up – while privately lobbying policy-makers to delay the adoption of such systems. But in recent months, they have begun to show signs of having a real impact on polluters.
