After years of intense debate, global climate change has finally been acknowledged as a
serious threat to global biological, political and economic systems. There is overwhelming evidence
that the atmospheric warming observed over the course of the past 50 years, as well as the
increasing incidence of extreme weather events and floods, is being caused by the acceleration of
the rate in which greenhouse gases (GHGs) produced by the burning of fossil fuels are being
released into the atmosphere. The extreme weather and weather-related events
associated with climate change, such as landslides and flooding, totaled roughly $40 billion in the
1990s. It is not surprising, then, that the governments of many developed and
developing nations, as well as intergovernmental bodies like the United Nations and the World
Bank, have adopted a variety of measures to reduce GHG emissions and mitigate the potential
impacts of climatic change. The government of Slovakia sold credits for 200,000 metric tons of
carbon dioxide equivalents to a Japanese trading house at an undisclosed price on December 6,
2002, making history by signing the first deal to be officially credited within the international
Kyoto Protocol, a global agreement to reduce the GHG emissions of participating countries seven
percent relative to their 1990 levels by 2010. Nor is it surprising that
environmental interest groups and active citizens in the United States and elsewhere are pressing
their elected leaders to pass stricter regulations on the emission of GHGs.
What is somewhat baffling, though, is the number of privately owned companies that have
taken it upon themselves to voluntarily reduce GHG emissions as a way to address climate change
in recent years. Dozens of companies are voluntarily participating in the design and
implementation of GHG emission reductions programs. For example, the International Emissions
Trading Association (IETA) lists 47 international members including Gaz de France, British Petroleum, Shell International Limited, Norsk Hydro and Unocal. Private for-profit groups like
the Chicago Climate Exchange (CCX), a pilot emissions reduction credit (ERC) trading program,
and C02e.com, Cantor Fitzgerald's online emission trading market, are forming partnerships with
private companies to devise strategies for reducing emissions in the quickest and most cost-effective
manner. Government programs like the Greenhouse Gas Emissions Reduction Trading
Pilot (GERT) in Canada and other programs in France and the United Kingdom are forming
similar partnerships. Nonprofit environmental groups like Environmental Defense and the World
Wildlife Fund have their own, similar pilot projects. Most of these voluntary programs are centered
around emissions trading, a policy tool commonly utilized for its cost effectiveness and ability to
yield abatement results.