The concept behind emissions trading is simple. The ability of our planet to absorb pollutants is limited. As with any scarce resource, the right to pollute can be effectively distributed via a market. By implementing markets for emissions rights, governments can directly impose on polluters the cost of their pollution. This creates monetary incentives to reduce pollution while ensuring that pollution occurs only in contexts where it is most necessary—as determined by a corporation's willingness to pay the highest price in a competitive market.

Publication of this edited collection is timely. Russia has finally signed on to the Kyoto Protocol on global warming, which means the treaty goes into effect in 2005. Emissions trading is going to take off worldwide. Even in the United states, which still refuses to ratify Kyoto, there are already trading programs for SO2 and NOX. There are also a number of state and regional initiatives to reduce emissions within the United States.

The book comprises 20 chapters divided into four sections:

The Emissions Framework

Financing and Risk Management

Investment and Production Implications

Trading Experiences and Outlooks

Chapters of the first section explain the Kyoto framework: domestic reduction measures, emissions trading, clean development mechanism, and joint implementation. It also describes how emissions trading programs work in practice—drawing on experiences with existing regional programs.

Chapters of the second section look at how individual companies can implement and finance emissions trading and emissions abatement programs.

The three chapters of the third section are all written by editors de Jong and Walet. They address the "make" or "buy" decision: whether firms should invest in emissions reductions initiatives or purchase allowances in the market.