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The carbon dioxide sink thus created, can be used to generate tradeable carbon credits.
There is no way to instantly rip out that infrastructure and replace it with something more energy efficient overnight.One answer is to have wealthy countries buy tradeable carbon permits from developing countries, giving them an incentive to slash emissions.
In addition, the use of tradeable carbon units combined with the Clean Development Mechanism (CDM) - whereby the Kyoto signatories from industrialised nations can invest in emission-reduction projects in developing countries - has huge potential for environmental damage and fraud.
For example, when emission quota permits are sold to industries and no tradeable carbon credits (i.e. credits for the carbon sequestrated in Kyoto forests) are granted, emissions decline by about 8% and GSP falls by about 3% of the base levels.
The Climate Change Working Group examines carbon finance (which includes the use of tradeable "carbon credits"), policy and regulation debates, and renewable energy.
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His encyclical on the environment expresses doubt about the ability of tradeable carbon-emission credits to bring about "radical change".
Emissions trading schemes based on the idea that markets are an efficient means to allocate resources have created the need for a tradeable right, the carbon permit.
One approach to this dilemma has been the attempt to "internalise" these "externalities" by using market strategies like ecotaxes and incentives, tradeable permits for carbon, and the encouragement of payment for ecosystem services.
If carbon credits are tradeable, however, the environmental benefits could be increased and the GSP cost could be reduced substantially.
Like all economists, he yearns for carbon taxes and tradeable permits and he believes that they will emerge after we exhaust other alternatives.
The key global mechanisms urgently needed to deal with this are making carbon dioxide a tradeable commodity through the cap and trade process already initiated in the EU (so-called carbon trading), and offsets under the clean development mechanism to assist developing countries to decarbonise.
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