| The purpose of the UK's carbon trading schemes | | | | expected to result in a noticeable pollution |
| is to help the campaign against climate change by | | | | decrease and a significant increase in cost to |
| making businesses pay for carbon emissions that | | | | businesses, mainly because the majority of credits |
| cause global warming. This is intended to give | | | | will be auctioned rather than allocated freely. |
| them financial motivation to reduce those | | | | While this scheme is aimed at companies that |
| emissions. The three main schemes are known as | | | | produce half the UK's emissions, the smaller |
| the EU Emissions Trading Scheme, the UK's | | | | polluters have not been forgotten. Another of the |
| Carbon Reduction Commitment and the UN's | | | | UK's carbon trading schemes is the Carbon |
| Clean Development Mechanism. | | | | Reduction Commitment. This is a similar scheme |
| Under the first of the UK's carbon trading | | | | starting in 2010 and in general will affect |
| schemes, the EU Emissions Trading Scheme that | | | | organisations that spend more than |
| had its first phase from 2005 to 2007, there is a | | | | ¤500,000 annually on electricity, such as |
| cap on emissions by heavy polluters. If they | | | | schools and hospitals. |
| exceed their caps they pay for the excess by | | | | The third scheme, the UN's Clean Development |
| buying more credits from similar businesses that | | | | Mechanism, is designed for smaller businesses. |
| do not use up all their allowances. This phase was | | | | Even though their emissions are not great enough |
| seen as unsuccessful with a price crash resulting | | | | to oblige them to participate in the UK's carbon |
| from too many free allowances and some | | | | trading schemes, they can elect to purchase |
| companies selling off their free credits but not | | | | carbon credits. Theoretically this could result in a |
| reducing their emissions sufficiently. For the | | | | shortage of credits that could raise the carbon |
| second phase, from 2008 to 2012, allowances are | | | | price for the heavy polluters and motivate them |
| more controlled and prices should become more | | | | even more to reduce their emission levels. |
| stable. The third phase, starting in 2013, is | | | | |