The primary causes of global warming are greenhouse gases, about 76 percent of which are composed of carbon. As a result, regulations related to environmental pollution are also actively applied to limiting carbon emissions by the state or companies. Concerning these greenhouse gas problems, the carbon emission trading system is regarded to be the most influential policy. Carbon emission trading, also known as Certified Emission Reductions (CERs) is being applied by the United Nations' Organization for Responsibility (DOE) in such a way that the government allocates a certain amount to the states and the enterprises.

Carbon emission credit is the right to release six main greenhouse gases for a certain amount per certain time. In other words, it’s the right to 'dispose of carbon'. This was created by the system of the Kyoto Protocol adopted to achieve the greenhouse gas reduction goal effectively, and has been in effect since 2005. Countries or companies that fail to meet their planned amount of carbon dioxide emissions within a set period are required to pay fines equal to three times the market price. Therefore, to avoid paying fines, carbon credits must be purchased and resolved from businesses that have surplus credits. On the contrary, businesses that have succeeded in the curtailment can sell as much as surplus credits they have. Looking into all these strict policies imposed on companies, it seems that CERs should have an effective impact on the environment. But have they?

In fact, since the introduction of the carbon emission trading system, global greenhouse gas emissions have never decreased. However, with the active application of policies to reduce greenhouse gas emissions, R&D on alternative energy-producing facilities such as solar and wind power generation, which were initially difficult to install due to high prices, has become more active, making them more affordable with higher efficiency. Besides, considering that greenhouse gas emissions have decreased by more than 45 percent in the U.K., which has preemptively enacted the Climate Change Act since 2008, it is predicted that other countries that started implementing carbon emission policies relatively late will be effective soon. In the end, the carbon emission trading system did not achieve what it was intended in itself, but it is meaningful in that it provided a platform for the next climate change strategies, such as the Paris climate agreement, to work in earnest.

From this future-oriented perspective, the carbon emission trading system is helping both environmental conservation and technological advancement. However, the burden on companies is increasing, given that all responsibility for implementing eco-friendly policies lies with them.  Reducing greenhouse gas emissions is a factor in rising costs for companies in the sense that the government will reduce the supply of carbon credits.

Also, China and the U.S., the No. 1 and No. 2 carbon emitters, have limits in that they do not participate in their national interests. The above countries, which each hold about 30 percent and 15 percent of the world's carbon emissions shares, have not ratified the Kyoto Protocol to protect their industries. In particular, the U.S. has encouraged other countries to push ahead with environmental policies more strongly but has shown signs of being anti-rational, which it does not want to implement in its own country.

So how carbon credit system should improve in the future? First of all, efforts to reasonably allocate carbon credits are needed to gain support from companies under the influence of carbon credits. Experts pointed out that the carbon emission trading system was originally aimed at reducing greenhouse gas emissions by effectively using market functions, but the present policy is only focused on regulating greenhouse gas emissions. Thus, to effectively utilize the market functions of carbon credits, cooperation among each country's ministries of finance, industry, and environment should be further strengthened to find the best point to minimize both environmental pollution and the burden on enterprises. Also, the Ministry of Environment should constantly monitor the emission rights situation of enterprises to review market stabilization measures, such as price stability of carbon credits.

Unlike Europe, which is setting a standard of policy related to carbon emission, China and the United States' policies on carbon credits have not yet been applied to influence companies as much. Although California has united with Quebec to implement its carbon trading system, the U.S. central government is still passive. In response, U.S. President-elect Joe Biden unveiled a $1.7 trillion climate plan last summer aimed at 100 % clean energy and zero net emissions by 2050. His ally, the U.S. Democratic Party, also announced plans to tackle climate change. The plan calls for achieving 100% clean cars by 2035 while demanding that carbon be priced among environmental regulations to achieve zero emissions by 2040. Since December 19, 2017, the Chinese government has implemented a three-stage carbon emission trading system. In the first stage, more than 3 billion tons of carbon, or about 30 percent of the nation's emissions, will be traded, and from the second stage, which begins at the end of this year, the government plans to use the national carbon market across the industry, unlike the first stage, which was limited to the power industry.

With growing interest in the future environment, the carbon emission system is also drawing attention in countries that once ignored the effectiveness of the system. However, various problems related to the system are being discovered. To alleviate these problems, companies must develop a sense of social responsibility for the environment. Also, governments of each country should pursue co-prosperity with businesses while continuing to push CERs. As global interest in environmental issues increases, the carbon emission trading system will take a step further, while the Paris Agreement replaces the Kyoto Protocol in 2020.