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Hi Alex. Working in the energy trading game for a few years now I can assure you your ideas on carbon trading are in the right direction. The carbon credits are a tradable comodity which will be issued against environmentally friendly upgrades to plant and also to new energy producing equipment which is either renewable, carbon reduced or carbon free. These credits will have a tradable value and will require energy producing companies to either purchase them, or trade them against less than freindly production methods to keep the production of carbon down. The producer who has high carbon outputs will need to buy credits which will increase his production costs while the carbon friendly producer will be able to sell his credits which will reduce his production costs and make his units cheaper. The aim is to force the high carbon producers to make improvements which will reduce overall production costs and be a little more friendly to the planet.
By the way, Carbon credits are not something new. In the past they were called REC's Renewable Energy Credits and all Electricity retailers were required to sell or buy REC's to a level which was a statutory % of their energy sales. 5 years ago REC's were traded at about $30/REC or MW they now trade at about $75. All renewable energy generators have the ability to produce REC's and new renewable energy sources produce one REC for each MW produced while older generators had a base line to reach before REC's were issued. This was an incentive program to build new renewable generators.
The new system while more complex, well at least appears to be, can only be good for the planet.
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