Seminar paper from the year 2012 in the subject Business economics - Business Management, Corporate Governance, grade: 1,7, University of Applied Sciences Paderborn, language: English, abstract: The goal and purpose of this paper is to describe the necessity and functionality of emission trading. Furthermore, it illustrates the basic procedure of emission trading and explains its general parts, in order to be able to evaluate the efficiency of emission trading and emphasize its critical aspects. Firstly, this paper explains the basic principles of emission trading, initially special terms and definitions. Then chapter two continues to clarify why emission trading exists and why its importance constantly rises. After that, chapter three deals with important boundary conditions. Chapter four contains the functionality of emission trading and its corresponding procedures. The term paper ends up with a brief conclusion, including a little forecast for the near future.