Chicago Climate Exchange (CCX), launched in 2003, is the worldâ€™s first and North Americaâ€™s only active voluntary, legally binding integrated trading system to reduce emissions of all six major greenhouse gases (GHGs), with offset projects worldwide.
Reductions achieved through CCX are the only reductions made in North America through a legally binding compliance regime, providing independent, third party verification.
I’ve been skeptical of this, but apparently it does get results. Emissions trading has been successful in phasing out lead from gasoline and in reducing acid rain.
Wikipedia explains how it works.
The buyer [of the emissions credit] is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those that can easily reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest possible cost to society.
This assumes that the system can’t be gamed and that it operates transparently and openly. It is also important for the controlling body to continually be reducing the number of emission credits available over a period of time to force the price up.
The system can scale, at witness the European Union Emission Trading Scheme, the largest greenhouse gas trading system in the world. It appears to be mandatory for large emitters, unlike the US market which is voluntary.
In order to make sure that real trading emerges (and that CO2 emissions are reduced), EU governments must make sure that the total amount of allowances issued to installations is less than the amount that would have been emitted under a business-as-usual scenario.