Today, to raise awareness of climate change, some tens of thousands of people made a public demonstration around the world. I learned about it late, so I decided to do some learning instead. Most of what I learned had to do with emissions trading. Here's some of the stuff I learned.

The Chicago Climate Exchange is a market for trading emissions-reductions. It's voluntary: if you run a facility that outputs greenhouse gases, you can join up. Your emissions over four previous years is measured, and that establishes a target for the next four years: determined by a reduction of 1% each year. If you miss your target, you can buy credits on the market; if you manage to beat it, you can sell. A corresponding futures market reduces exposure to price volatility.

Australia has a law (enacted 2000) which makes large consumers of electricity liable to pay for some of it in the form of wind power. This is managed through Renewable Energy Certificates (RECs). For every 100,000 MWh of electricity you buy, you have to surrender 1250 RECs, which you can earn by operating a wind power plant or by buying them from someone who does. I'm not sure what other countries have such a law.

TerraPass is a product you can buy at home to effectively reduce your own greenhouse-gas emissions by as much as giving up driving your car (without lifting a finger!), by harnessing the power of emissions markets. For US$30–80, you can buy 6,000–20,000 lbs. of CO₂. TerraPass has several ways of accomplishing this reduction. They can buy up credits on the CCX, for example, thereby removing that much from the market; other methods include buying wind power and funding projects that neutralize CO₂. On their website they have a detailed log of all the emissions they've eliminated this year.

TerraPass claims to offer 3rd-party certification that your money will actually buy the advertsied amount of emissions-reduction. I don't understand how they do that; presumably they're giving themselves a safe margin. On top of that, TerraPass is a for-profit company with a target profit margin of 10%. Even so, $80/year is less than the cost of internet access and it apparently cancels the CO₂ emissions of an SUV.

On the other hand, presumably the price would go up as it becomes harder and harder for emitters to cut back. The Kyoto Protocol's target is to reduce greenhouse gas emissions of industrialized countries by 5.2% from 1990 levels by 2012. With a growing population, can this be accomplished through obvious tricks and applications of known technology? Or does it depend on innovative breakthroughs?

Starbucks purchased 34 million pounds of CO₂ this year. It's not clear to me whether this is an ongoing commitment or a one-time stunt.

There is a magazine, Carbon Finance, aimed at people who want to follow the financial aspects of carbon emissions.

The Wikipedia article on the Kyoto Protocol is an interesting source of details about the treaty. The protocol went into force this past February and the Parties to the agreement are currently this week in Montreal.