Here’s a half-baked post that I started months ago. I decided to rush it to press for Earth Day, which is today.
The first U.S. auction for carbon emission pollution rights occurred in December of 2008. It raised over $38.5B, which will go to six states in New England. From ScienceNOW Daily News:
The auction’s premise is that putting a price tag on pollution–so-called carbon trading–will eventually reduce emissions industrywide. Companies must pay for the right to emit greenhouse gas emissions and are penalized for excess pollution.
RGGI states, picture
The ten states shown in dark green are participating in RGGI. Observers are represented in lime green.
How did the auction work? online, reserve price, open to investors and environmental groups, required for power companies in RGGI states. Not required for manufacturing or transportation. Any earth-day-interested readers out there to fill in these details? Or, to do a little follow up research about how things have gone? (I wrote this last December.)
Finally, here is a humorous critique of carbon trading, based on the observation that carbon credits are a scarce resource. This is highlighted by a paired example from cheatneutral. I find it compelling.
Healthy Algorithms 
A good critique, and funny, but why don’t you think that a carbon auction is a good way to get rid of the most carbon for a given sum of money? Maybe $1M does the most good if used to get rid of black carbon-emitting cook-stoves in India (see http://www.nytimes.com/2009/04/16/science/earth/16degrees.html?ref=world), a bit less good cleaning up some coal-burning power plant in the U.S., and the least good retro-fitting commercial buildings for greater efficiency. If so (and I’m making it up; I have no idea if the example is true), shouldn’t we direct our resources to the more-bang-for-the-buck goals first? Is carbon trading not a way of doing so (if properly implemented, which in the real world it won’t be, but maybe even so)?
Incidentally, I watched all 12+ minutes of the video, so, you know, the next guy doesn’t have to.