The lowdown on carbon trading

One of the first moves of the newly elected Rudd Government last December was to ratify the Kyoto Protocol, thereby committing Australia to meet strict targets for reducing its emissions of carbon dioxide and five other greenhouse gases by 2012.

Background on Kyoto

The Kyoto protocol is a legally binding international treaty that aims to reduce greenhouse gas emissions worldwide.

Emissions caps and credits

Because Australia only became a full member of the Kyoto Protocol in March 2008, much later than many other signatories, much of the detail about how the Government will manage our emissions - and which organisations will be affected - is still up for conjecture.

Carbon trading - the basics

Carbon trading schemes involve the transfer of carbon credits, with one carbon credit being equivalent to a tonne of carbon doixide emission ((CO2e). To give you some idea of magnitudes, a mid-size vehicle that clocks up 15,000 kilometers a year on its odometer generates approximately 5.5 tonnes of CO2e per annum (ie equivalent to 5.5 carbon credits).

Trading down-under

Australia's Rudd Government has committed to implementing a greenhouse gas emissions trading scheme by 2010.

"1 Carbon Credit = 1 tonne of carbon dioxide emission"