A new global currency?

Carbon emission trading involves the trading of permits to emit carbon dioxide or other greenhouse gases. International treaties such as the Kyoto Protocol set quotas on the amount greenhouse gases countries can produce.

A country or a group of countries caps its carbon emission at a certain level and then issues permits to firms and industries that grant the firm the right to emit a stated amount of carbon dioxide over a time period. Firms are the free to trade these credits in a free market. Businesses that are over their quotas must buy carbon credits for their excess emissions, while businesses that are below their quotas can sell their remaining credits.

Off The Edge, Jun 2007 issue 30.