ABSTRACT
The emissions reductions targets contained within the Kyoto Protocol result in a price being placed on what was previously, in financial terms at least, cost free. The cost of carbon will be determined by a combination of international, national and local policy and regulatory frameworks. At this early stage these frameworks, and hence the cost of carbon, are highly uncertain; the ratification of Kyoto is yet to be achieved, and the detailed rules and modalities contained therein are still in the process of being defined. This involves monitoring and measuring emissions, ascertaining the marginal abatement costs (MACs) for CO2 and other greenhouse gases (GHG), which are currently poorly understood. One such tool is emissions trading, which helps reveal MACs while concurrently reducing emissions in a cost-effective manner. The Kyoto mechanisms are an important step in corporate investment strategies can be harnessed to deliver results consistent with the objectives of the Framework Convention on Climate Change (FCCC).
