Carbon Credits and Carbon Trading: A Legal Perspective

Running head: LAW OF FINANCE
Law of Finance
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1LAW OF FINANCE
Abstract
In order to address the growing problem of global warming, carbon credit trading schemes have
been adopted to ensure reduction in carbon emissions and GHGs emissions. Carbon markets and
carbon credits are perceived as part of the international as well as nation’s attempts to alleviate
the rise in the level of greenhouse gases (GHGs). The carbon prices are normally estimated in
Euros per tonne of carbon dioxide or its corresponding. Carbon Framers Initiative has been
developed to enable farmers and landholders participate in the carbon reduction initiative
voluntarily but they shall be entitled to rewards and incentives if they undertake projects that
involve eligible activities. however, such activities must be approved by the CFI Act 2011 to be
considered as eligible projects. However, governments all over the world are working with
scientists, experts committee to develop methodologies that are effective enough to prevent
GHGs emissions and avert its adverse impact on the community.

2LAW OF FINANCE
Table of Contents
Introduction......................................................................................................................................3
Background..................................................................................................................................3
Purpose........................................................................................................................................5
Methodology................................................................................................................................6
Scope............................................................................................................................................6
Structure of Paper........................................................................................................................7
Theoretical approach.......................................................................................................................7
Literature review..........................................................................................................................7
Evidence........................................................................................................................................11
Analysis.........................................................................................................................................12
Conclusions....................................................................................................................................13
References......................................................................................................................................15

3LAW OF FINANCE
Introduction
In the contemporary era, human race is facing with global warming that has become a
significant concern all over the world. The rise in the temperature in the atmosphere and oceans
of the earth is due to global warming. Carbon markets and carbon credits are considered as part
of the international and nation attempts to alleviate the rise in the level of greenhouse gases
(GHGs). These measures aim at introducing market mechanisms to influence commercial and
industry processes to adopt procedures that results in low or less carbon emissions. The industrial
and commercial processes must adopt intensive approaches that are used when no expenses is
incurred while emitting GHGs and carbon dioxide into the atmosphere. Several companies sell
carbon credits to individual as well as commercial customers who intend to reduce the carbon
footprints voluntarily.
In regards to the emission markets, climate exchanges have been established to provide a
Spot market in allowances and a Future as well as an Option Market in order to discover a
market price and maintain liquidity (Urry, 2015). The carbon prices are normally estimated in
Euros per tonne of carbon dioxide or its corresponding. Although other greenhouse gases can be
traded but they are quoted as regular multiples of carbon dioxide in terms of their potential to
cause global warming.
Background
The notion of carbon credits have emerged because of growing awareness of the need for
controlling emissions. According to the Intergovernmental Panel on Climate Change [IPCC],
the policies that provide implicit or real price of carbon may develop incentives for the
consumers and producers encouraging them to make significant investments in the low-GHG