A criticism of carbon trading is that it allows companies in developed countries to continue spewing out greenhouse gases by purchasing carbon credits from developing countries. I tend to agree with the critics that we'd be better off if everybody just did their bit to reduce, but for now it ain't gonna happen - so is carbon trading all that bad? It's supposed to result in emission cutbacks everywhere, even if industry gets away with more than it really should.
Problem is, the carbon market is not robust enough to make much difference. There aren't all that many projects registered under Kyoto's CDM (the World Bank only handled $10 billion in carbon financing in 2005), and prices are too volatile in the thinly traded market to inspire confidence. And credits given to European industry are too generous to encourage investment in carbon reducing technologies. The bottom line is that the market is not maturing fast enough, and is not sending the necessary signals to get the developed world to change its habits.
