Carbon trading began in response to the Kyoto Protocol, signed by 180 countries in 1997. The Kyoto Protocol, signed by 180 countries in 1997, called for 37 industrialized countries to reduce their greenhouse gas emissions between the years  2008 to 2012 to levels that are 5% lower than those of 1990.

Article 17 of the Kyoto Protocol established emissions trading by allowing countries that have emission units to spare (emissions permitted to them but unused) to sell this excess capacity to countries that are over their emissions limits. In effect, this created a new commodity in the form of emissions and created a carbon market. Since CO2 is the principal greenhouse gas, emissions trading effectively became carbon trading. 


As many people in Kyoto suspected at the time, the reality has been very different. At the demand of the United States, the Kyoto rules were tweaked to allow rich countries to buy their way out of their targets, a move that gave birth to the multi-billion carbon trading industry.


Enron Also Courted Democrats  

Published 4:00 am, Sunday, January 13, 2002


According to internal Enron documents and the recollections of former employees, Chairman Kenneth L. Lay had the ear of top Democrats in the 1980s and '90s. He and his colleagues used that access to promote the company's interests with the Clinton administration and key congressional Democrats.

In a White House meeting in August 1997, for example, Lay urged President Clinton and Vice President Gore to back a "market-based" approach to the problem of global warming -- a strategy that a later Enron memo makes clear would be "good for Enron stock."

On Aug. 4, 1997, Lay and seven other energy executives met with Clinton, Gore, Rubin and other top officials at the White House to discuss the U.S. position at the upcoming conference on global warming in Kyoto, Japan. Lay, in a memo to Enron employees, said there was broad consensus in favor of an emissions-trading system.

Enron officials later expressed elation at the results of the Kyoto conference. An internal memo said the Kyoto agreement, if implemented, would "do more to promote Enron's business than almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States."

No longer on Washington Post website, republished here


Washington Post - Kyoto 2

But some business groups -- especially those representing alternative energy technologies -- praised the president's plan. "This is a measured, appropriate action plan, given what we know about global warming," said Terry Thorn, senior vice president of Enron Corp. of Houston.

More than a dozen senior executives representing such companies as Nike Inc., Bechtel Group Inc. and Mitsubishi Motor Corp. have endorsed a newspaper ad running this week that calls for "strong leadership" by the United States on climate change.


Cap-and-trade has long been a convoluted disguise for a carbon tax, but as even Exxon Mobil has noted, a carbon tax is both more effective and more efficient than cap-and-trade.

Cap-and-trade is a misguided spawn of crunchy granola capitalism - environmentalism flavored with free market imitations. It was inspired in the 1990s by ideas originally floated at Enron and later by BP during its "beyond petroleum" public relations campaign.




How about funding green infrastructure? Texas, of all places, has the strictest renewable-energy mandate in the USA - and consequently lots of windmills. And who can we thank? Enron. It lobbied Governor George W Bush hard for the measure in 1999, partly because it coveted the chance to trade carbon credits and partly because it needed to help out its loss-making windmill arm, Enron Wind. Enron was showered with plaudits from green groups for its support for alarm about climate change.



Closure of the Chicago Climate Exchange. The hub of carbon trading in the USA.

IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, announced in April 2010 that it had agreed on terms to acquire Climate Exchange plc.

That acquisition was completed in July 2010 and was followed by an announcement that half of the company's Chicago-based workforce would be laid off due to inactivity in the U.S. carbon markets. In November 2010, the Climate Exchange stated that it would cease trading carbon credits at the end of 2010, although carbon exchanges will still be facilitated.