If prices for emissions credits are volatile and companies and consumers incur losses as a consequence, political support for the program will falter.
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Until then, Navistar will continue to build and ship its current trucks, using a combination of earned emissions credits and fines to offset its polluting engines.
For example, large companies like Google and GM purchase emissions credits from the carbon markets to allow them to claim that their overall carbon emissions is zero.
That could be a carbon tax or a cap-and-trade system, such as Europe's Emissions-Trading Scheme, which limits how much producers can emit, and lets them buy and sell emissions credits.
The bill being proposed would reduce nationwide greenhouse gas emissions 17 percent by 2020 and 83 percent by 2050 through a so-called "cap-and-trade" program under which companies would buy and sell emissions credits.
Carmakers in California are granted 40 emissions credits for each zero-emission vehicle produced this year, provided it can go 100 miles without needing to recharge or refuel and can be recharged or refueled in ten minutes.
America was heavily involved in the design of the Kyoto protocol, and insisted that it should include the possibility of a market in emissions credits, on the ground that its trading scheme to reduce sulphur-dioxide emissions had been a big success.
In a nice twist, StatoilHydro gains emissions-reduction credits it can apply to other efforts worldwide.
The system would set a price for greenhouse gas emissions, such as carbon dioxide, and polluters would obtain and trade credits for emissions over a set threshold.
More than 500 National Hockey League players have promised to offset their travel emissions by buying carbon credits.
The global carbon market trades emissions via cap-and-trade schemes and credits that offset reductions in carbon emissions.
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It is renewable and it evokes credits in net carbon dioxide emissions, as well.
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Such a technique would then allow utilities to spend money on the kinds of technologies needed to cut emissions, instead of having to buy credits.
One such emerging tool is the voluntary carbon emission market, a place where corporations voluntarily buy emission credits to offset their own carbon emissions without regard for any requirement like a carbon cap.
The idea was that countries whose emissions fall under the emissions cap -- the permitted level of CO2 equivalent emissions per year -- could then sell those carbon credits to countries who are not able to meet their own caps.
Japanese firms can use the credits to prepare for their country's own looming emissions-trading scheme, and the Japanese government can use them to meet its Kyoto commitments.
The major auto makers will soon have their own zero-emissions vehicles, which Mr. Musk says will end Tesla's credits boom by year end.
ETS. Those companies have also been given emissions-reduction targets, which they can meet by cutting their own emissions, or by buying allowances from other companies, or by purchasing credits from developing countries.
The protocol sets binding greenhouse gas limits on 38 industrialized nations and sets up apparatus such as "emissions trading, " in which a country having trouble meeting its requirements can buy credits from others that exceed them.
In the developing world it can earn UN-backed carbon credits, which can be sold to governments or firms that must reduce their emissions under the Kyoto protocol.
Google says it has been carbon neutral since 2007, offsetting its greenhouse gas emissions by signing contracts to purchase renewable energy from wind farms and the like and by buying carbon credits that help finance other green power projects.
Just how many carbon credits a steel mill or data center might need to buy depends on accurate measurement of their emissions.
Countries that can prove they store carbon, such as via their forests, can sell these credits on the market to businesses that have exceeded the agreed cap on their own allowable carbon emissions.
Although the U.S. Congress is likely to impose a cap-and-trade system after the presidential election later this year, proposed legislation by U.S. senators Joseph Lieberman and John Warner would limit the value of foreign credits by allowing U.S. companies to use them to cover only 15% of their emissions.
Proponents of carbon trading envisage a new global investment market based on emissions trading, where companies and countries have incentives to invest in developing world projects due to the highly coveted carbon credits they receive for doing so.
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