Norwegian Point Carbon has its finger on the pulse of emission trading

"Obama's success or failure in establishing a system for carbon trading in the US is going to be a decisive factor at climate negotiations in Copenhagen," says Per-Otto Wold.

In Europe 28 countries take part in an emission trading scheme - the 27 EU member states and Norway. It is one of the main tools to reduce greenhouse emissions. The idea is to grant industry and energy companies CO2 emission permits. They can then choose to use it, or install CO2 capture technology or limit emissions in other ways. In that case they can sell their emission permit to other companies. The idea is that this should make companies choose the cheapest way of reducing emissions first. Meanwhile, the emission cap will gradually be lowered.

"The most important development since emission trading was introduced in 2003 is that it actually works. If you introduce a CO2 tax you don't know whether it will lead to reduced emissions," says Kjersti Ulset, a Point Carbon analyst.

Each country decides on how emission permits are given out, in accordance to the foundations laid out in the Kyoto Protocol. Only major emissions can be regulated. In Europe that means 12,000 factories and power plants and 4,000 companies. These are responsible for 50 percent of Europe's total CO2 emissions.

"We're talking a lot of players here. If you also consider the mechanism where European companies can buy emission permits by investing in green development in developing nations, we're talking a global business," says Per-Otto Wold.

New sectors might soon have to cap their CO2 emissions, like air traffic and shipping.

Subscribers in Tuvalu

"There are 30,000 subscribers to our information services in 150 countries. One is the archipelago of Tuvalu, which risks disappearing under the rising sea if global temperatures keep rising," says Per-Otto Wold.

The four founders of Point Carbon are not CO2 experts. They worked at the Fridtjof Nansen Institute, which does research on international negotiations. Whilst there they realised information was one of the main things lacking when the world attempted to negotiate the first climate agreement. Nobody knew how much CO2 was being emitted, or who was doing it.

Emission trading works only if you have correct information. In 2006 the value of emission permits collapsed. One of the main reasons was that France had negotiated emission permits for its industry that were too large. The market was flooded. 

That is why Point Carbon's analysis often influence the emission permit market, which already has a €100 billion annual turnover. It also affects ordinary people, because the price of emission permits is ploughed straight back into the price of electricity.

Point Carbon now employs 200 people, with 35 working out of Washington DC. They have offices n London, Tokyo, Beijing, Kiev, Hamburg, Zürich and Malmö. So what are the prospects for the Copenhagen negotiations?

"One question which will affect the negotiations is whether President Obama can pass his health reform. A delay there will influence how far the USA can stretch in the climate negotiations," says Kristian Tangen, senior analyst at Point Carbon.

"We will be present in Copenhagen with 15 people who will follow negotiations," he says.

"But it looks like we're going to end up with a separate solution where the EU carries on with its system and the USA implements its own. It will be difficult to get a comprehensive deal which can replace Kyoto. There will also not be any new, binding targets. Those will come at a later date," he says.