Carbon trading is a key tool in the global effort to mitigate climate change. Utilities are working to increase the share of renewable and low carbon energy sources in their portfolios, while manufacturers are improving energy efficiency and reducing carbon exposure in their supply chains. Emissions trading, which sets a cap on overall emissions and allows companies to choose between reducing emissions, trading allowances with other companies, or both, is considered one of the most economically efficient ways to force emissions cuts. However, its future is uncertain and is driven by emerging legislation for the period after 2012. Executives responsible for investment outcomes post-2012 should be preparing for this uncertainty by maximizing competitiveness and minimizing risk.
