Why support carbon markets?


Carbon markets are a powerful tool for fighting climate change, since they create flexible economic incentives for reducing greenhouse gas pollution. They also reward innovators who develop cleaner technologies.  

Pretend you’re a factory owner: How carbon markets help you and the climate

  • Slide 1Slide 1: Your government wants to fight global warming but doesn't want to hurt businesses. So they set up a carbon market.
  • Slide 2Slide 2: Guided by science, the government sets an annual cap on total emissions.
  • Slide 3Slide 3: Participating businesses receive a set number of emission allowances, totaling less than the cap.
  • Slide 4Slide 4: It's been a year. Time's up! How'd you do?
  • Slide 5Slide 5: If you were below your pollution allowance, you can sell the excess for a profit.
  • Slide 6Slide 6: If you polluted too much, you can buy additional allowances from others.
  • Slide 7Slide 7: The government gradually lowers the total cap, encouraging energy efficient behavior and smart carbon innovations.

Growing momentum

As long as the total cap is followed, participants who pollute too much are balanced out by lesser polluters. And because greenhouse gases always have a global effect—unlike, for example, mercury emissions, which have a local impact—heavy polluters don’t unduly hurt their local communities. This structure allows carbon markets to be easily expanded and linked together.

Carbon markets, modeled after the successful U.S. acid rain program that was launched with EDF’s help1, are taking off at home and abroad.

  • 25%Countries representing one-quarter of the world’s economy are putting carbon markets in place.
  • 40% The Regional Greenhouse Gas Initiative has reduced power sector carbon emissions by more than 40% since 2005.
  • $12 billionAfter California announced a cap on carbon in 2006, more than $12 billion in clean energy venture capital has flown into the state, a figure higher than all other states combined.
  • 250 millionChina, with help from EDF, is implementing cap-and-trade pilot programs in seven provinces and cities that encompass 250 million people.
  • 1.5%European Union emissions have been decreasing at an average annual rate of 1.5% since the EU launched its carbon market in 2005.

How we’re ensuring the success of carbon markets

EDF is playing a key role in many ways, including:

  • WORKING with policy makers and businesses in California, the world’s 8th largest economy, to make sure California’s Global Warming Solutions Act (AB 32) succeeds. A key part of the plan includes a carbon market-like system.
  • ENLISTING businesses like Walmart to take early action, setting the stage for a robust national carbon market.
  • ENCOURAGING Congress to consider the efficiency and effectiveness of flexible, market-based limits on carbon pollution. 
  • HELPING China establish a nationwide carbon trading system that links to other carbon markets around the globe, as well as implement pilot projects that reduce emissions and alleviate poverty.
  • ADVANCING proposals that reward rainforest nations like Brazil and Indonesia for reducing deforestation.

Do you share our vision?

We believe that cultivating eco-friendly markets around the world is key to curbing climate change. We welcome your support.

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1. Since the cap-and-trade program for acid rain was implemented in 1990, SO2 pollution from power plants has been cut by more than half at a fraction of the projected cost.