Garbon markets were central to the Kyoto Protocol and produced distinct European Union (EU) and UN carbon-trading systems that have subsequently triggered a flurry of schemes that are either operating or are in development. These all follow the trading rights approved at Kyoto - companies buy allowances enabling them to emit a given amount of carbon dioxide (CO2). Governments, or international bodies, issue a limited number of these allowances - less than enough to cover all carbon emissions. Companies can purchase these to continue polluting, or sell them if they cut emissions. Either way, they must go to the market. Over time, the number of permits shrinks, forcing up the price of carbon and making it good business sense to pollute less.
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