Both Labor and Liberals have committed to a national emissions trading scheme, and the Greens also support a trading scheme as an effective tool to tackle climate change. Market-based solutions are central to the Kyoto Protocol. But is carbon trading a real solution?

Carbon trading creates a market in which companies buy and sell pollution credits. The most widely used scheme is the "cap and trade" system: a cap on total emissions is established by government, permits to pollute are distributed among industry up to that cap and the "invisible hand" of the market supposedly finds the cheapest way to meet it.

Setting a price on carbon, the theory goes, gives polluting companies an economic incentive to reduce emissions. If companies produce below their carbon allocation, they can sell their permits on the carbon market. If companies produce over their quota, they are penalised because they need to buy carbon permits from those who have produced below their target.

Carbon trading thereby reduces action to avert the enormous threat that climate change poses to a cost-benefit analysis. It is symbolic of our sick capitalist society which prioritises profits above all else.

Nevertheless, is carbon trading a "practical, sensible and flexible approach to reducing greenhouse gases", as Labor's Peter Garrett claims? The experience of the European Union Emissions Trading Scheme (ETS) - the largest carbon trading scheme in the world established in 2005 - is most illuminating.

Rather than reduce emissions, the first few years of the ETS witnessed an increase in pollution. To protect the profitability of their competing economies, governments massively over-allocated emissions permits to the heaviest polluting industries.

By 2006 this forced the price of carbon to drop by more than 60 per cent, creating even more disincentive for industries to lower their emissions. The European Commission reported that emissions from the EU's major industrial users actually rose by 1-1.5 per cent in 2006.

The process of allocating permits to pollute has also been fundamentally flawed. The major emitters were given permits for free - a process known as "grandfathering". Because permits are commodities that can be sold on the market, while the cost of carbon remained high, this represented an obscene transfer of wealth to the most polluting industries. Market analysts estimated that in the scheme's first year, the UK's most polluting industries earned collectively £940 million ($A1.792 billion) in windfall profits from generous ETS allocations.

It is clear why many companies have come out loudly in support of emissions trading.

A second market mechanism has been established by the United Nations. The Clean Development Mechanism (CDM) facilitates investment in emissions reduction schemes, such as tree plantations, in developing countries and China, India and Russia, rather than forcing a reduction of emissions at the source of pollution.

Investment in carbon "sinks", such as tree plantations to "offset" pollution, is extremely problematic. It is not possible to equate the absorption of atmospheric carbon by trees and carbon emitted from burning fossil fuels. Carbon absorption by trees is not permanent: forests are vulnerable to fire, drought and sequestration limits. And fast-growing monoculture tree plantations are replacing native plants and old-growth forests containing rich biodiversity.

Finally, local communities have often been forcibly evicted from their lands to establish these "green" projects. As the First International Forum of Indigenous Peoples on Climate Change stated, "sinks in the CDM would constitute a worldwide strategy for expropriating our lands."

At Mount Elgon National Park in Uganda, the Dutch FACE Foundation has been planting carbon "offset" trees since 1994. Villagers living near the park have been beaten and shot at, barred from their land and had their livestock confiscated by armed park rangers.

UN sources suggest that up to 20 per cent of offsetting projects do not produce any cut in emissions, but due to "gross incompetence, rule-breaking and possible fraud" have been wrongly approved.

The CDM has allowed rich countries and companies to continue to pollute disproportionately, while proclaiming their green credentials.

The failure of market-based "solutions" is no surprise given that it is the capitalist system, driven by the blind pursuit of profit, which is responsible for the process of environmental destruction.

To reverse climate change we need to stop pollution at its source. We need to stop subsidising fossil fuels. We need enormous research and investment in renewable energy. We need a free public transport system. We need investment in energy-efficient homes close to where people work. These are but a few eminently possible steps.

But to achieve this, the deadly logic of capitalism needs to be confronted, not accommodated. We need get off the dead-end detour of carbon trading and back on the path of action embodied by the upcoming Walk Against Warming demonstrations. But ultimately, we need to do away with a system based on rampant disregard for human life and the environment.