The Global Climate Managed Account Program provides Carbon Emission exchange trading in support of the Kyoto Protocol of 1997. This page is designed to assist is the understanding of carbon emissions and the cap-and-trade system for carbon reduction.
TRADING CER AND EUA'S
Certified Emission Reductions ("CER") are project credits flowing into the global compliance market and are generated through emission reductions from the CDM (Clean Development Mechanism) projects. A number of countries and companies will make use of project credits from CDM and joint implementation projects to be in compliance with their Kyoto targets. Reducing emissions outside one's own site or country (external abatement) can be a cost effective alternative to internal abatement.
EUAs are European Union Allowances, which permit the holder to emit one tonne of carbon dioxide. EUAs are issued under the European Union Emission Trading Scheme (EU ETS), which was established by member states in the EU as a mechanism to meet their commitments to reduce carbon dioxide emissions agreed in the Kyoto Protocol.
BACKGROUND - KYOTO PROTOCOL
The Kyoto Protocol is a UN-led international agreement reached in 1997 in Kyoto, Japan to address the problems of climate change and reduce greenhouse gas emissions. The Kyoto Protocol went into force in February 2005.
The Kyoto Protocol involves moving away from fossil fuel energy sources - oil, gas, and coal, to renewable 
sources of energy - hydro, wind and solar power, and to less environmentally harmful ways of burning fossil fuels. Greenhouse gases such as carbon dioxide, methane and nitrous oxide are mainly generated by burning fossil fuels. Higher levels of greenhouse gas emissions cause global warming and climate change.
The Kyoto Protocol commits 38 industrialized countries to cut greenhouse gas emissions by 2008-2012 to overall levels that are 5.2 percent below 1990 levels. Targets for greenhouse gas emissions reduction were established for each industrialized country. Developing countries including China and India were asked to set voluntary targets for greenhouse gas emissions.
The Canadian target for the Kyoto Protocol is to reduce greenhouse gas emissions by six percent below their 1990 levels by 2012. The United States did not ratify the Kyoto Protocol, and in February 2002 introduced the Clean Skies and Global Climate Change initiatives, in which targets for reduction in greenhouse gas emissions are linked directly to GDP and the size of the U.S. economy.
REGIONAL GREENHOUSE GAS INITIATIVE
The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions. Ten Northeastern and Mid-Atlantic states will cap and then reduce 10% by 2018 CO2 emissions from the power sector. The ten participating states are - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.
ASIA-PACIFIC PARTNERSHIP ON CLEAN DEVELOPMENT AND CLIMATE
APP partners Australia, Canada, China, India, Japan, Republic of Korea, and the United States have agreed to work together with private sector partners to meet goals for energy security, national air pollution reduction, and climate change in ways that promote sustainable economic growth and poverty reduction. The Partnership will focus on expanding investment and trade in cleaner energy technologies, goods and services in key market sectors. Canada was included as a partner on October 15, 2007.
The seven partner countries collectively account for more than half of the world's economy, population and energy use, and they produce about 65 percent of the world's coal, 62 percent of the world's cement, 52 percent of world's aluminium, and more than 60 percent of the world's steel.
There are some important differences to the Kyoto Protocol. The Asia-Pacific Partnership is voluntary and technology-based. Unlike Kyoto which has set a legally binding agreement for greenhouse gas reduction targets, APP lets each country set its own goals for greenhouse gas emission reductions. Critics of APP see this as a tactic by Canada to undermine its agreement toward Kyoto and become an opposing force.
MONTREAL CLIMATE EXCHANGE
Launched in May 2008 in collaboration with the Chicago Climate Exchange® (CCX), the Montréal Climate Exchange (MCeX) has decided to launch trading of futures contracts on Canada carbon dioxide equivalent (CO2e) units. The futures contract is based on 100 Canada carbon dioxide equivalent (CO2e) units. Each unit, as defined by the Government of Canada, allows for the emission of one metric tonne of carbon dioxide equivalent (CO2e).
UNDERSTANDING CAP AND TRADE
A central authority (usually a government or international body) sets a limit or cap on the amount of emissions discharged into the atmosphere. Companies that exceed the cap may be subject to fine or regulatory sanction. Therefore, those who find they cannot meet the conditions of the cap will look to buy credits from those who pollute less.
Many older established companies are forced to spend considerable sums of money modernizing plants. In many instances this takes time, usually years to achieve. In contrast to new generation technologies which are not faced with up-grading facilities to comply with 1990 emission standards. Trading emission credits is a way for low emission companies such as wind farms to sell credits to benefit higher emitting company's. Cap And Trade programs ultimately aid in being a net benefit to the host country by enabling it to meet it's commitment to the Kyoto Protocol Agreement.
