VANCOUVER - There's something counter intuitive about creating what amounts to a stock market for the thing we all exhale when we breathe, the thing that comes out of our car's tail pipe.
But that's what carbon trading is, putting a value on the emission of greenhouse gases - mainly carbon dioxide - that scientists finger as the driving force behind man-made climate change.
Carbon trading is likely to figure in the B.C. government's ambitious, still fuzzy, plan to reduce the province's current greenhouse gas emissions by a third by 2020.
The Conservative government in Ottawa balks at meeting Canada's commitment under the 1997 Kyoto Protocol but its proposed Clean Air Act leaves room for carbon trading, a practice spawned by Kyoto.
Detractors dismiss carbon trading as nothing but a shell game that allows industries and even countries to avoid making real reductions in their own carbon emissions by buying someone else's.
But supporters say the practice leads to real reductions in greenhouse gas emissions and that people, not just industries or countries, could ultimately play the market.
One thing is certain; a booming carbon-trading market has been created literally out of thin air in the last three years.
"What we're seeing is absolutely fascinating," says one government official, who did not want to be named. "It's the development of a new market for something that people just completely ignored previously."
The latest World Bank carbon market report last October found transactions in the first nine months of 2006 totalled more than $21.4 billion US, almost double what they were in all of 2005.
The lion's share - $18.8 billion US - took place in the European Union's emission's trading scheme. The EU market opened in January 2005 as the organization implemented its Kyoto caps on carbon emissions.
But the concept is not well understood in Canada.
Carbon trading in simple terms aims to spread the pain of steadily ratcheting down the total amount of greenhouse gas emissions.
"Emissions trading is always a transitional tool to help you take responsibility for emissions now while you prepare to make actual emission reductions in your own operations, hopefully as soon as possible," says Matthew Bramley, Ottawa-based climate change director for the Pembina Institute.
It can take several forms.
The European market is largely in so-called allowances. The EU's 11,000 registered emitting facilities face statutory caps on greenhouse gas production.
Those who better their targets can put their unused allowances on the market where companies that missed their goals can buy them.
These are different from carbon credits, also known as offsets, which accrue to companies not under the caps but which still demonstrate they've achieved net reductions in greenhouse gas emissions.
For instance, replacing a logged tree wouldn't qualify. Planting an additional tree probably would.
Those credits - each equalling a tonne of CO2 emissions - can be traded on the open market and are available to operators who need to offset excessive emissions.
Kyoto is in limbo in Canada and the United States but there's a small, growing private market in voluntary emission reductions, mainly via the Chicago Climate Exchange.
Its 225 members - including Canadian firms such as Manitoba Hydro and forest company Abitibi-Consolidated - commit to a consensus level of annual reductions and trade credits.
The upsurge of interest in climate change has boosted volumes on the exchange, an official says. Trading in the first six weeks of this year equalled a third of last year's total volume.
But the real action - and for some the preferred model for North America - is in the more regulated EU market.
It's governed by the United Nations Framework for the Convention on Climate Change, which sets the standard for what counts as a creditable emission reduction.
Pembina's Bramley agrees carbon trading in itself doesn't reduce emissions. It simply moves them from one place to another.
"Why would you want to do that?" he asks. "Because by moving them around you might be able to have lower cost opportunities to reduce."
Just like outsourcing manufacturing, the cost of reducing global greenhouse gas emissions might be cheaper in the developing world than in Europe, Japan or North America.
The Kyoto Protocol has three trading systems, the most popular of which is the Clean Development Mechanism that covers projects in developing countries.
The World Bank reported $2.26 billion US in CDM transactions in the first three quarters of 2006 covering 500 projects - a tenfold increase from all of 2005.
Kyoto also allows countries to buy carbon credits under the International Emissions Trading system.
In the controversy over Canada's ambivalence towards Kyoto, there was speculation the country would purchase Russia's unused allowance, a figure set before its industrial production sank with the collapse of the Soviet Union.
But Bramley says there's no interest, here or elsewhere, in buying what's dubbed Russia's "hot air."
"What people are buying instead are other kinds of tradeable units available under Kyoto," he says. "These ones (such as CDMs) are actual credits that come from specific emission-reduction projects that have to be identifiable and verified."
So far, most of the attention has been on carbon trading among businesses and nations but individuals are slowly being drawn in.
People can already buy carbon offsets for things like jet travel through web sites such as www.my-climate.com.
Dave Mowat, head of Vancity, Canada's largest credit union, boasts on the institution's web site that he became the first carbon neutral CEO in 2005 by reducing his CO2 emissions by 25 per cent and offsetting the rest by investing in a wind-energy project.
The practice has detractors who suggest it's a way for the affluent to assuage their guilt over the heavy imprint they leave on the environment.
But experts like the approach as long as it's accompanied by an earnest effort to cut one's own carbon emissions.
"Clearly, if you are using offsets to compensate for having bought a gas-guzzling SUV, well you're really missing the point here and that is counter productive," says Bramley.
The day may come when people can accumulate carbon credits, like a company, and sell them on the open market.
Britain is mulling the idea of a "carbon credit card" in which everyone would have a set limit and would have to buy additional credits if they go into "overdraft."
Likewise, those who haven't maxed out their carbon credit card could sell the unused portion.
