Carbon permit trading2.1 Relevance and organization of emissions tradingGreenhouse gases, such as water vapor, carbon dioxide, Ozone and methane produced by power plants, transport and factories, are considered the main driver of climate change with devastating impact on nature. Recent efforts by global players to “go green” by offering carbon-neutral products are unlikely to stop global warming (John Gapper, 2006 and Heide Bachram, 2004). It is therefore once again the responsibility of governments to encourage emissions reductions by setting a price on emissions. The famous UN Kyoto Protocol is an agreement on the environment and sustainable development that was set out to support and monitor governments' efforts to reduce emissions (UNFCCC). To do this, governments can promote alternatives, impose standards and processes as well as the trading of emissions quotas (Matthew Dalton, 2007). The most advanced trading market is the European Union's Emissions Trading System (EU ETS), which is the main focus of the following chapters.2.2. Commercial opportunities in emission markets2.2.1. Commercial gains from permit surpluses, 2007). Companies, which currently work mainly in energy-intensive sectors, receive emission allowances (EUAs) based on a historical emission level reduced by a country-specific reduction, see table in the appendix (European Union, 2007 ). The cap is seen as an incentive for companies to improve their production processes, to promote the use of alternative energies to ...... middle of paper ...... carries risks for investors. The market is speculative as the “learning curve” of emissions trading is still at a low level and emissions data does not appear sufficient to provide enough certainty. The allocation rules seem quite unpredictable, which certainly does not build confidence in regulators and authorities. Changing the rules quickly can influence price levels and accidentally increase the appeal of substitute products. Companies that view emissions trading as an additional cost and regulatory burden may fear falling behind international competitors. However, as the supply of natural resources becomes increasingly scarce and consumers become more aware of global warming, companies may even benefit from a first-mover advantage and unique sales prospects. Recent examples include the CSR and “green product” hype currently experienced by many industries in developed countries..