This is all very good news but emissions trading only works if the rules that are put in place are adequate to the task in hand. Our experience in Europe to date has shown that many things can get in the way of creating a market which successfully reduces emissions and creates incentives for serious investment in solutions.

We have been tracking the evolution of emissions trading since it was first proposed. The one thing that has become clear is that if decisions are left to Governments and industry alone bad things happen.

In the first years of the EU scheme the rules were so weak that by the end of the trading period the price of permits had crashed to zero - because caps were too generous and far too many permits were handed out.

This effectively meant the whole enterprise had delivered nothing in the way of incentives. It did, however, create large amounts of data that can help to improve the future operation of the scheme.

We are currently in the second period of trading in which the rules have been improved but not in terms of accounting for the huge drop in economic activity and hence demand for permits. So there are still far too many permits in circulation to really drive change. But at least this time we have data and can use it to check up on what's really going on.