The carbon markets were created in February 2005 when over 120 nations signed the Kyoto Protocol to mitigate climate change. Signatories in developed nations agreed to cap their carbon emissions. They in turn put caps on their most carbon-intensive industries. When a company in one of those industries wishes to pollute beyond their cap, they must purchase a “carbon credit” from another company that is polluting below that cap, or from a project in a developing country that is using clean technology. For more detail on the carbon markets see overviews by Environmental Defense, or EcoSecurities.
