The present study throws light on the usefulness of Emission Trading as Green Solution in present scenario. Emission trading principle initiated from the technocracy movement which proposed Energy Accounting System in 1930s. Now this is recognized as Emission Trading in Kyoto Protocol which came into force on February 16th, 2005. The obligations of signatory countries are: Reduction of emission of Green House Gases (hereinafter GHGs) notified in Annex-I of Kyoto Protocol and engaging in emission trading if the signatory nations maintain or increase the emission of GHGs.Emission trading brings flexibility to this strict obligation. It aims at achieving the mandate of emission limitation for reduction of GHGs in the signatory nations. It is a cap and trade system under Kyoto. ‘Cap’ is the limit (national level commitments) which is set by the government agency on the amount of emission of the notified pollutants. The pollutant emit ters are required to hold equivalent number of credits or allowances representing the right to emit a specific amount, so that the amount of credits should not exceed the cap.Kyoto has classified signatory countries into two categories, firstly, Annex-I countries (developed countries), which accept GHGs reduction obligations and have to submit Greenhouse Gas Inventory (hereinafter GGI) and non-Annex-I countries (developing countries), which have no GHG emis sion reduction obligations and may participate in Clean Development Mechanism (hereinafter CDM). Thus, emission trading is carried out by Annex- I countries. They buy credits from non-Annex-I economies (CDM) or from Annex-I countries under Joint Implementation or Annex-I countries with excess allowances.Non-compliance in first commitment period (2008-2012) will attract penal ization under which the Annex-I country will have to submit 1.3 emission allowances in the second commitment period on per ton gas emissions. It is said that the individual targets of Annex-I parties will result in a total cut of 5% in GHG emissions from 1990 levels. Emission trading as a green solution has been criticized on many grounds. Practically, most countries devolve their emission targets to individual industrial entities. Hence, the ultimate buyers of credit are often indi vidual companies which in turn will put the monetary burden of such cred its on the consumers. It is also politically popular because of its vul nerability to lobbying. It is expected that even without Kyoto Protocol obligations by year 2010, there will be a 29 % cut in GHGs.On the whole, the major reason of its criticism is that of the benchmark taken and the percentage of the reduction. Without these two, the authen ticity of emission trading cannot be proved as it has some adverse ef fects too, which might hinder the development of developing countries.

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