Executive Summary

Carbon trading started after the Kyoto Protocol was adopted on 11 December 1997. The protocol operationalises the United Nations Framework Convention on Climate Change by committing countries to limit and reduce greenhouse gases (“GHG”) emissions. As part of its strategy the Kyoto Protocol created 4 types of carbon credits, the AAU, RMU, ERU and CER.

Transfer and acquisitions of these units are tracked and recorded through the registry systems under the Kyoto Protocol. The largest emissions trading market is the EU Emissions Trading Scheme which was established in 2005 where EU Allowances (“EUAs”) are traded.

Carbon credit prices started to recover in 2017, and in 2020 the global carbon markets grew by 20% to over US$267 billion. The market is expected to grow further as nations race to meet the 1.5°C global warming target, however it still only benefits the few. By design, it's largely inaccessible to most individuals as an investment and is only available for offset.