International emissions trading
Emissions trading is a powerful instrument for managing greenhouse gas emissions. In addition to the EU’s emissions trading system, there are other systems in operation or under development in Canada, China, Japan, New Zealand, South Korea, Switzerland and the United States.
Trading under the Kyoto Protocol
Parties to the Kyoto Protocol (“Annex B Parties”) have accepted commitments for limitation or reduction of emissions. These goals are expressed as assigned amounts. The first commitment period for achieving these goals was 2008 to 2012. The assigned amounts are represented by units called AAU (assigned amount units).
Emissions trading is defined in Article 17 of the Kyoto Protocol. It allows countries that have an excess of AAU units to sell them to countries that exceeded their targets and therefore have a deficit of units. Transfers of units can only be made within and between each party’s Registry under the Kyoto Protocol. A list of all countries that have a national Registry can be found on the UNFCCC website.
United Nations Framework Convention on Climate Change (UNFCCC) is the administrative body for emissions trading under the Kyoto Protocol. UNFCCC manages the international transaction log, ITL. ITL basically performs the same work as EUTL does for the EU Emissions Trading System, but ITL monitors and controls international emissions trading under the Kyoto Protocol.
Within the EU, the parties’ national Registries are placed in the CSEUR (Consolidated System of European Union Registries) platform, which in practice is part of the Union Registry and administered by the respective Member State. All units and transfers within EU, containing units originating from the Kyoto Protocol are checked and verified by the International Transaction Log, ITL.
In addition to AAU units, there are additional unit types that can be traded within the scope of international emissions trading under the Kyoto Protocol. For more information about unit types:
It is up to each party to decide whether trade in units originating in the Kyoto Protocol may be conducted by anyone other than the party itself. In Sweden, it is allowed for anyone to trade with these units. Learn more about account types to better understand which accounts can and cannot be used to hold units originating from the Kyoto Protocol.
Trading under the Paris Agreement
Under the Paris Agreement, participating countries have committed themselves to reducing their greenhouse gas emissions. The tools (mechanisms) of the Paris Agreement for cooperation between countries and trade in emission reductions are governed by Article 6 of the Agreement.