Essay on Why Carbon Finance? Global Climate Change
Carbon finance is a general term referring to resources provided to obtain greenhouse gas (GHG) emission reductions. Recognizing the impacts and threats of global climate change, governments and other entities have met annually at the Conference of the Parties (COP) of United Nations Framework Convention on Climate Change (UNFCCC) since 1995. The Kyoto Protocol was adopted in 1997, in which 36 industrialized countries (called the Annex B countries) committed collectively to reduce emissions of six main GHG by an average of 5% against the 1990 levels during the First Commitment Period of 2008 to 2012. Fifteen European Union countries committed to reduce emissions by 8%; the United States committed to a 7% reduction. Some countries will remain at the 1990 levels, or limit their emission growth under committed levels. (See Table 1 for the national targets) The US, although being one of the signatories, indicated that it would not ratify the Protocol due to the exemption of the developing countries, especially China and India, and the concern about hurting the US economy. Canada withdrew from the Protocol for similar reasons in 2011, before it entered into force. In spite of the withdrawal of the US and Canada, the Kyoto Protocol, along with the EU Emissions Trading System (EU ETS), have created the global carbon market.
To achieve the reduction targets, the Annex B countries have several options:
• Reduce emissions domestically. For example,…