Promoting carbon reduction through market means is the best method discussed by the United Nations after rounds of climate summits. Through carbon trading, corporations could sell their unused carbon quota while companies whose carbon emissions exceed the limitation could buy an additional quota or pay a penalty charge.
 

Besides carbon quota trading, Certified Emission Reductions (CER), a type of emissions unit issued by the Clean Development Mechanism (CDM) Executive Board for the emission reduction achievement through CDM projects, can also be traded and used to achieve companies’ carbon reduction targets. For instance, the carbon dioxide absorbed by forests can be traded after being certified. 

Since the transaction price of China Certified Emission Reductions (CCER) is generally lower than that of the carbon quota, emission control corporations tend to offset the carbon emissions by CCER, and only 5% of the quota can be offset by CCER as stipulated in the current policy.

Learn more from the full article (in Chinese only) written by Kenny Siu, Senior Advisor of AEC Group, published on Sing Pao on 3 January.