What type of units can countries trade under the international emissions trading market?

The international emissions trading market primarily operates with Assigned Amount Units (AAUs), which represent the right to emit one metric ton of CO2 or its equivalent in other greenhouse gases. These units are allocated to countries as part of international agreements, such as the Kyoto Protocol, based on their commitments to reduce emissions. Countries that have successfully reduced their emissions below their assigned amount can sell their surplus AAUs to other countries that are exceeding their limits.

This trading mechanism is designed to provide flexibility and economic efficiency to countries struggling to meet their emission reduction targets. It promotes the overall goal of reducing greenhouse gases by allowing countries with lower costs of emissions reductions to sell their excess capacity to nations facing higher costs.

Emission Reduction Units (ERUs) and Carbon Credits are part of other trading mechanisms but relate to specific project-based emissions reductions and not directly to the international allocations made under agreements like the Kyoto Protocol. Renewable Energy Units, while related to renewable energy production, do not function in the same way as AAUs regarding the international emissions markets. Thus, the correct choice reflects the fundamental unit used in these international agreements.