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The ICAP is designed to provide an international forum in which governments and public authorities adopting mandatory greenhouse gas emissions cap and trade systems will share experiences and best practices on the design of emissions trading schemes. It is hoped that this cooperation will ensure that the programmes are more compatible and are able to work together as the foundation of a global carbon market.

Such a market will boost demand for low-carbon products and services, promote innovation, and allow cost effective reductions to allow swift and ambitious global reductions in global warming emissions.

The ground-breaking international and interregional agreement was signed today by European Union members - including Portugal, Germany, United Kingdom, France, Ireland, Italy, Spain, the Netherlands, Greece, and the European Commission - U.S. and Canadian members of the Western Climate Initiative, northeastern U.S. members of the Regional Greenhouse Gas Initiative, as well as New Zealand and Norway, who joined on behalf of their emissions trading programs.

Leaders attending the summit included: President Jose Socrates, Council of the European Union and Prime Minister of Portugal; European Commission President Jose Manuel Barroso; Governor Jon Corzine, New Jersey; Governor Eliot Spitzer, New York and Premier Gordon Campbell, British Columbia. Gordon Brown and Arnold Schwarzenegger, Governor of California, participated with video messages.

Prime Minister Gordon Brown said:
"The launch of the International Carbon Market Partnership is a truly significant step forward in the global effort to combat climate change. Building a global carbon market is fundamental to reducing greenhouse gas emissions while allowing economies to grow and prosper. Trading emissions between nations allows us all to reach our greenhouse gas targets more cost-effectively. And it therefore allows us to reduce emissions more than we could by acting alone."

Jose Socrates, Portugese Prime Minister and EU President, added:
"An efficient global carbon market will be a powerful tool in the fight against climate change, as it will generate a robust price for carbon. This will offer businesses the certainty and guidance they need to promote investment in low carbon technologies, their deployment and dissemination. The launch of ICAP today will bring us a step closer to this goal."

Eliot Spitzer, New York Governor, said:
"Global warming is the most significant environmental problem of our generation, and by establishing an international partnership, we are taking the vital steps to address this growing concern. In the absence of federal leadership, New York is implementing a greenhouse gas emissions trading program that will achieve a 16 percent reduction in power plant emissions by 2019. Today, we continue that work by joining the International Carbon Action Partnership, or ICAP, where we can begin working with our global partners, share experiences and address issues of program design and compatibility, thereby strengthening our markets."

Cap and Trade Schemes
Cap and Trade schemes work by allocating a certain amount of emissions to an organisation.  If the organisation uses less than its allocation it can sell its remaining allocation to another organisation, thus creating a market where there is a financial advantage for producing fewer emissions.

The EU Emissions Trading Scheme (EU ETS) is currently being reviewed and there are many greenhouse trading programmes being developed around the world. For these schemes to succeed, it is crucial that these schemes are all designed to be compatible with each other. This new partnership, it is hoped, will allow this to happen.

Though cap and trade is not a magic pill that will automatically reduce emissions, it is something that gives organisations an incentive for reductions.  For the schemes to be really effective though, they do need to ensure that the price of carbon is high enough to encourage reduction - i.e. buying carbon is not the easy way out.  Additionally, many environmental groups are concerned that cap levels are too comfortable and so emissions are not being pushed down, rather they are maintaining a status quo.

According to the Government's figures, when the UK ran a pilot greenhouse gas trading scheme from 2002 to 2006, it achieved nearly 20 million tonnes of CO2 emissions reductions.

The UK has set its cap or target for 2008-2012 of the EU Emissions Trading Scheme at 13% below its 2005 emissions. It was able to do so by trading emissions with its European partners and by investing in emissions reductions in the developing world.