Overview:

Climate change is one of the most important global issues of our time and also one of the most controversial. Amidst the global debate, vital facts on this matter are often lost. Despite extensive coverage on climate change, many still are not clear on its full implications, or are confused by the acronyms, the players involved, and the contradictory studies and reports.

Fact number one (and this has been proven conclusively by the scientific community) is that the earth's atmosphere is warming and that human-caused greenhouse gas emissions are contributing to this trend. Global warming is real, it's here and it will continue for some time with consequences that will affect every species on the planet.

Fact number two (and this too has been proven conclusively) is that if we don't do something about it now, the problem will simply become worse and the price tag for inaction will increase accordingly.

Fact number three is that much can be done to lessen the impacts of climate change and to slow down the rate of temperature growth by reducing the amount of greenhouse gas emissions caused by human actions. But whatever we do, all nations have to work together to make the necessary changes.

Thus the main issues before political, business and societal leaders today are how to deal with the inevitable impacts of climate change, and how to slow down further global warming by reducing man made greenhouse gas emissions.

The first major international effort to develop such a climate change strategy was the United Nations Framework Convention on Climate Change, an agreement signed by 189 countries in 1992. The Framework eventually led to the formation of the Kyoto Protocol in 1997. The Kyoto Protocol, which has been ratified by 164 countries, including Canada, the European Union, China, and India, establishes specific targets for emissions reductions for industrialized countries.

Under the Kyoto Protocol, Canada agreed to reduce its greenhouse gas emissions to six percent below 1990 levels between 2008-2012. Instead, our greenhouse gas emissions in 2004 were 26.6 percent above 1990 levels, which translates into 34.6 percent above the Kyoto Protocol target.

Many now question whether that target was realistic or even achievable. On reflection, it appears that too little analysis was undertaken by the government of the day on what would be required to achieve the Kyoto targets.

The federal government is re-examining Canada's emissions reduction targets and what will be required to achieve real results. The recent tabling of the Clean Air Act was the first step in what has been promised as a series of moves to establish a credible and attainable Climate Change Plan.

One of the main features of the Kyoto Protocol was the establishment of market-based mechanisms to stimulate the development and deployment of technologies that could help reduce carbon-based greenhouse gas emissions and conserve energy.

In broad terms, countries could meet their emissions reduction targets by lowering their own emissions; by purchasing carbon credits (which are essentially permits to emit greenhouse gases); or by investing in projects that would reduce emissions in other countries. The ability to earn and to trade carbon credits has given rise to a new market for carbon credits. These were first deployed in the European Union, but now are becoming more widespread. Worldwide, it is estimated that the emerging market for carbon credits is now worth more than $22 billion and is rising fast.

The main benefit of such 'trading systems' is the incentive they provide to the deployment of new technologies that can reduce greenhouse gas emissions or conserve energy. Renewable energy technologies that harness wind, solar and geothermal energy sources have been the prime beneficiaries of such investments. Biofuels are also an emerging area of interest, as carbon dioxide is absorbed from the growth of plants that are used to create biofuels.

Notwithstanding the growth in alternate and renewable energy sources, energy from fossil fuel sources will continue to dominate the world's energy supply system for some time. Thus it is important that ways are found to use coal, oil, and gas more efficiently and to generate fewer greenhouse gas emissions in the process. Energy conservation is also an opportunity area for immediate gains in emissions reductions, both for developing and industrialized nations,as is reducing deforestation, which also helps preserve the earth's natural carbon storage capacity.

It is clear that governments world wide have accepted the realities of climate change, and that the private sector has awakened to the opportunities and risks involved. A recent report by the Carbon Disclosure Project, a coalition of investors with $31.4 million in assets, revealed that the private sector is engaging climate change at fundamental levels, and that investors also are signaling their recognition of the realities of climate change, and more specifically, the risks to invested capital associated with it.

With these general thoughts in mind, the GLOBE-Net Primer on Climate Change and Carbon Trading sets out the basic facts on both the science and the business of climate change. GLOBE-Net readers will be better able to sift through the very complex and often confusing array of facts and choices before us as we come to grips with what clearly is the most critical challenge facing mankind today.

• Overview
• What are greenhouse gases (GHGS)?
• Who determines whether climate change is real?
• What are the likely impacts of climate change?
• What can be done about climate change?
• Who regulates climate change and carbon trading?
• What are carbon credits and how do they work?
• How do Kyoto Protocol carbon credits work?
• Where are other carbon trading markets located?
• Conclusion